Committee hears DFR warning on S154 biomarker testing study and potential state costs

The committee on health care heard from Mary Block, deputy commissioner of insurance for DFR, on a proposed study bill, S154, that would examine mandating biomarker testing and its likely effects on insurance premiums.

Block told committee members that as drafted S154 is highly prescriptive and would force the department to hire outside experts to satisfy specific technical requirements. "It's a very, very specifically detailed study right now, which we're gonna have to bring in outside help," she said, urging lawmakers to consider broader language so DFR could leverage existing research from other states and organizations.

The deputy commissioner explained a central fiscal concern: defrayal. "Defrayal means that if we add a mandate that was not previously in the benchmark, a new benefit, the state is required to pay the difference in the cost of that mandate … so that it does not impact the insurers," Block said. In other words, if a new mandated benefit raises premiums above the benchmark, the state would cover the added premium cost.

Block cautioned the committee that a proposed federal rule in the Centers for Medicare & Medicaid Services' (CMS) 2027 Notice of Benefit and Payment Parameters could expand defrayal obligations. Under the proposal, CMS has suggested requiring defrayal for every mandate enacted since 2011. "We will either have to reverse our mandates or we will pay the cost for everything that was mandated that is over and above the ACA requirements since 2011," she said, noting that DFR and many states have submitted comment letters opposing that change.

Committee members and DFR staff reviewed prior examples of state-level mandates that could trigger defrayal calculations, including hearing aid coverage and coverage for prosthetics and orthotics, and cited more politically contentious items such as abortion coverage and gender-affirming care as examples DFR is tracking while compiling a list of post-2011 additions.

Block said the department is focused on two primary questions for the study: how would biomarker-testing requirements affect premiums, and would the state be required to defray those costs. She recommended study language that directs DFR simply to analyze the premium impact and the potential need for defrayal rather than requiring the agency to evaluate a long list of test-level technical criteria such as FDA label indications or device-specific approvals.

The deputy commissioner also warned against mandating specific tests without guardrails: other states have faced problems when a required test later proved unreliable. "Arizona had an issue, where they mandated the use of a particular test that turned out to be fraudulent," she said, urging caution in drafting any coverage mandate.

The committee heard that S154 as currently written is a study and does not itself create a coverage mandate or trigger defrayal immediately; the department would need funding to complete the analysis. DFR did not testify on S154 in the Senate, Block said, and the committee recessed for a 15-minute break before its next witness.

Next steps: lawmakers may revise S154 to broaden study language and ask DFR to provide cost estimates, including actuarial calculations of premium impacts and the state's potential defrayal exposure, before the committee advances any further action.