The Health Insurance Risk-Sharing Plan (HIRSP) provides major medical
health insurance coverage for persons who are covered under Medicare because they
are disabled, persons who have tested positive for human immunodeficiency virus,
and persons who have been refused coverage, or coverage at an affordable price, in
the private health insurance market because of their mental or physical health
condition. Also eligible for coverage are persons who do not currently have health
insurance coverage, but who were covered under certain types of health insurance
coverage for at least 18 months in the past.

Premiums paid by covered persons fund 60 percent of the operating costs of
HIRSP and health insurer assessments and health care provider payment discounts
fund the remaining 40 percent of operating costs. HIRSP provides premium and
deductible subsidies for covered persons with annual household incomes below
$25,000. The subsidies are funded equally by health insurer assessments and health
care provider payment discounts. HIRSP is administered primarily by the
Department of Health and Family Services (DHFS), but a board of governors (board)
and a plan administrator also have certain responsibilities and powers with respect
to HIRSP administration.

This bill makes the following changes to HIRSP:

1. Under the bill, as a condition of coverage of their prescription drugs under
HIRSP, each drug manufacturer or labeler is required to pay an assessment that is
based on the total claims paid by HIRSP in the previous calendar year to pharmacies
and pharmacists for the manufacturer's or labeler's drugs. The assessment amount
for each claim is equal to the rebate amount that the manufacturer or labeler pays
for the drug under Medical Assistance. Under the bill, the 40 percent of HIRSP's
operating costs that remain after premiums are used to pay 60 percent of the costs
are first to be paid with the drug manufacturer and labeler assessments. The
remainder of the 40 percent of the costs are paid, in equal proportions, by the health
insurer assessments and the health care provider payment discounts. The bill allows
the Pharmacy Examining Board to assess a forfeiture of not more than $1,000 per
day against a drug manufacturer or labeler that fails to pay an assessment for
HIRSP.

---

2. The bill removes most of the administrative responsibilities from DHFS and
transfers them to the board. For example, under current law, DHFS may establish
different deductible amounts and a different coinsurance percentage from what is
provided in the statutes, while under the bill the board may do so; under current law,
DHFS must establish payment rates by adding an enhancement determined by
DHFS to the allowable charges under Medical Assistance, while under the bill the
board establishes the allowable charges in the same manner and must consult with
DHFS; under current law, DHFS establishes a program budget in consultation with
the board and may implement the budget only if it is approved by the board, while
under the bill the board establishes the program budget and must consult with
DHFS in deriving the provider payment rate; under current law, prior to each plan
year DHFS must estimate the operating and administrative costs of HIRSP and set
premiums, insurer assessment amounts, and provider payment rate discounts,
while under the bill the board performs these functions, as well as setting the drug
manufacturer and labeler assessment amounts; and under current law, DHFS is
required to promulgate rules for the operation of HIRSP and must consult with the
board before promulgating any rules related to HIRSP, while under the bill the board
is required to promulgate rules for the design and operation of HIRSP, consulting
with DHFS as necessary, and DHFS may promulgate a rule only if the board has
approved the proposed rule.

3. Under current law, the secretary of health and family services, or his or her
representative, is the chairperson of the board. The bill provides that the board will
annually select the chairperson. The bill also adds a representative of
Pharmaceutical Research and Manufacturers of America to the board, the members
of which are appointed by the secretary of health and family services.

4. Under current law, expenses covered under HIRSP and exclusions are set
out in the statutes. The bill eliminates those provisions and requires the board to
establish by rule the plan design, including covered expenses and exclusions.

5. Under current law, DHFS may select the plan administrator in a competitive
bidding process. The bill requires the board to select the plan administrator in a
competitive, request-for-proposals process and allows the board to contract with
other persons to provide professional services to the board and HIRSP.

6. The bill allows the board to establish for covered persons with annual
household incomes over $100,000 a separate schedule of premium rates that are
higher than the rates for other covered persons. The additional premium collected
must be used to further reduce the premiums paid by lower-income covered persons
who receive a subsidy for premiums and deductibles.

7. Under current law, a person is eligible for HIRSP coverage if he or she is
rejected for coverage by one or more insurers, has coverage canceled by one or more
insurers, or receives notice of a substantial reduction in coverage or a 50 percent
increase in premium. Under the bill, a person is eligible if he or she is rejected for
coverage by two or more insurers or if he or she is rejected for coverage by at least
one insurer in addition to having coverage canceled or reduced, or premiums
increased, by one or more insurers.

---

8. Under current law, a person is not eligible for coverage under HIRSP if he
or she is eligible for coverage provided by an employer. The bill requires DHFS to
verify information that an applicant provides about his or her employment and
whether health care coverage is available through that employment and to
periodically verify the information if the person receives coverage under HIRSP.
DHFS must maintain a data base with the information and submit a quarterly report
to the board on the information.

9. Finally, the bill requires that any federal grant moneys received by the state
under the Trade Adjustment Assistance Reform Act of 2002 be used for HIRSP to pay
plan costs before any costs are paid with premiums or insurer and drug
manufacturer and labeler assessments and provider payment discounts.