The Business Council supports S.7867(Seward)/A.10524(Cahill) which would exempt Employer Group Waiver Plans (EGWPs) that cover prescription drug benefits for Medicare beneficiaries from New York Insurance Law requirements including, State benefit mandates and form as well as rate filing requirements.
Employer Group Waiver Plans are Center for Medicare Service (CMS) approved programs for both employers and unions. They often include a fully insured plan to cover non-Medicare Part D prescription drugs. Since the implementation of an EGWP could result costs as much as 20% lower than what employers pay for retiree drug coverage under other programs, they have grown in popularity.
In New York there are 216,599 retirees enrolled in EGWPs, over 17% of the total of all Medicare Advantage enrollees and third highest in the nation. Many of these retirees were previously employed by New York State and other government entities.
Since all Medicare Part D prescription drug benefit plan designs must meet CMS requirements and CMS asserts aggressive regulatory oversight on all Part D carriers and enforces broad retiree consumer protections through their benefit designs. The agency has, through guidance, opined that other benefits offered through EGWPs are "inextricably intertwined with drugs offered under the Part D benefit such that the two cannot be separated as a practical matter."
CMS provides plans with flexibility to provide additional benefits to retirees, provided that the underlying Medicare Part D benefit standards are met. It is common for plans to offer multiple cost-sharing tiers in their Part D and EGWP products offered to employers or unions to provide cost savings to their members and encourage quality. However, should New York assert regulatory authority over Part D EGWPs, these plans would be limited to only three cost-sharing tiers, where most Part D plans have 5 tiers. This change alone would increase costs for those employers (public and private) who continue to offer retiree benefits, and likely would require reopening of collective bargaining agreements to address this increased cost.
As the sponsors have indicated in their justification memo, subjecting EGWPs to New York regulatory requirements alters the underlying basic benefit design. Forcing a change in the benefit design…is disruptive and may be harmful to consumers if employers or unions discontinue the coverage.
Guaranteeing quality health coverage for New York’s retirees from both the private and the public sectors remains a priority for New York’s business community. Preserving choice and ensuring an array of benefit plans is the surest way to protect retirees. State laws and regulations mustn’t stand in the way of a common-sense approach taken by the federal government and other states. For these reasons, The Business Council supports S.7867(Seward)/A.10524(Cahill).