ERISA employer group opposes Kentucky bill that regulates self-insured plans, PBMs

The ERISA Industry Committee, which represents large employers that provide worker benefits, has come out strongly against proposed legislation in Kentucky that it said attempts to control the network practices and plan options available to self-insured employer plans as well as the pharmacy benefit managers managing them.

“We have deep concerns with provisions of this legislation as currently drafted that would overstep state authority to control self-insured employer health-care plans governed by the federal ERISA, which PBMs often administer,” it said in public comments on Kentucky Senate Bill 188, “If enacted, this legislation would raise health insurance and prescription drug costs across Kentucky and would stand in conflict with federal law governing the design and administration of employer-sponsored health plans nationwide.”

ERIC expressed concerns with provisions that it said would:

• Define self-insured employer plans as an “insurer” to which the bill’s requirements are applied.
• Place network adequacy requirements on self-insured plans.
• Place recordkeeping and reporting requirements on self-insured plans.
• Restrict self-insured plans’ use of cost-saving mail-order pharmacy services.
• Limit the ability of plans and PBMs to establish minimum network participation standards through an “any-willing pharmacist” requirement.
• Require a $10.64 minimum dispensing fee for every prescription filled across the state.

“Many of the provisions contained in SB 188 threaten to directly undermine the ability of self-insured plans to continue to provide access to quality, affordable health care by explicitly including self-insured plans in statutory definitions, creating a range of costly administrative and reporting requirements, increasing statewide health-care costs and potentially leading to a mismatched patchwork of state rules rather than ERISA’s uniform national framework,” ERIC said. “The impact of many of the bill’s provisions will likely be weighed heavily by employers with operations, employees and health-care benefit plans throughout Kentucky and could disadvantage the state’s economic climate.”

ERIC said it may take legal action if the bill becomes law: “Provisions of the bill are preempted by ERISA and, therefore, ERIC may pursue or support litigation challenging it on behalf of our large employer member companies if enacted.”

Related: Self-insured employers pay more for procedures than fully-insured plans: Why?

However, Family Health Centers in Louisville, Ky., supports the legislation, saying Senate Bill 188 focuses on preserving patient pharmacy choice, mandating fair contracting and reimbursement practices among PBMs and setting a reimbursement rate floor to prevent financial undercutting.

“We are seeing more and more pharmacies closing in Kentucky because of the unfair practices by PBMs and other bad actors,” said Dr. Michael Lin, chief of pharmacy operations. “We need to put patients before the profits of these big corporations, and this bill will help Kentucky do that.”