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Committee backs bill allowing five-year contracts for PHIP Medicare Advantage drug plans
Summary
SB195 would let PHIP seek five-year contracts for Medicare Advantage prescription drug plans to potentially secure better rates; the committee gave the bill a favorable report, 16-0.
Senate Bill 195, sponsored by Senator Orr at the request of a PHIP representative, was given a favorable committee report after the vendor and agency representatives explained why a longer contract term could lower rates for the Medicare Advantage prescription drug plan (MAPDP).
Miss Scott, speaking on behalf of PHIP during the hearing, said current law requires rebidding certain contracts every three years. She told the committee that vendors use PHIP's risk scores to draw down federal funding and that some vendors could offer more competitive pricing if asked to propose five-year rates in addition to three-year rates. PHIP said it will solicit rates for multiple term options — three years; three years with two one-year renewals; and five years — and will continue to rebid if officials believe they can obtain better terms earlier.
Committee members asked whether the change would affect state employee coverage; witnesses and committee members clarified that PHIP covers public education employees and that state employees are covered by a separate State Employees' Insurance Board. PHIP said the agency reviews contracts between bidding cycles and has previously rebid agreements early when savings were plausible.
The committee recorded a roll call of 16 ayes, 0 nays and gave SB195 a favorable report.
