Kentucky

SUMMARY

In the 2018 legislative term, Kentucky introduced healthcare price transparency legislation aimed at prescription drugs and regulation of pharmacy benefit managers (PBM). The state passed HB 463, which prohibits overpayment for prescription drugs (“clawbacks”) as well as “gag clauses” that forbid pharmacists from telling consumers about cheaper options. The legislature also passed SB 5, which requires PBMs to disclose their contracts with Kentucky managed care organizations and provides the state authority to review and approve the contracts. The legislation hopes to improve transparency to help make prescription medications more affordable. The Kentucky legislature also introduced a number of bills aimed at addressing surprise billing (balance billing), but none were passed at the end of the session.

In the 2016 legislative term, Kentucky sought to regulate price transparency in the very narrow area of air ambulance pricing. HB171, which was introduced but did not pass, would have required air ambulance providers to disclose certain price information to the Kentucky Board of Emergency Medical Services and would have required health benefit plans to “prominently provide notice in each contract” whether air ambulance is covered, and if so, the amount of coverage.

 

LEGISLATION/REGULATION

Legislative Calendar

Kentucky’s most recent legislative session ran from 1/2/2018 – 4/15/2018.

 

Recent Legislative Developments

Healthcare Transparency

2018 SB 154 AN ACT RELATING TO HEALTH CARE TRANSPARENCY: require, for all health benefit plans, insurers to develop and implement an incentive program for covered persons who elect to receive a comparable health care service; require insurers to establish an interactive mechanism on a publicly accessible Web site that enables covered persons to obtain information about amounts paid for health care services by their insurer and a good-faith estimate of out-of-pocket costs for a nonemergency health care service; require health benefit plans to provide coverage for certain nonemergency services provided by a nonparticipating provider at prices that are the same or less than the average allowed amount for participating providers; require contracts with participating providers to include a clause requiring the provider to provide sufficient information to covered persons for the person to receive a good-faith estimate pursuant to the Act; require nonparticipating providers to disclose the price of nonemergency health care services to covered persons; require health care providers to post notice to patients of their rights under this Act and to disclose prices charged for the most common health care services. Engrossed – Passed in Senate, received in House 3/29/18.
HB 463 AN ACT RELATING TO PHARMACY BENEFITS: Create a new section of Subtitle 17A of KRS Chapter 304 to define cost sharing; prohibit an insurer, pharmacy benefit manager, or other administrator from requiring payment for prescription drugs in excess of certain amounts; prohibit an insurer, pharmacy benefit manager, or other administrator from imposing a penalty on a pharmacist or pharmacy for complying as required; prohibit an insurer, pharmacy benefit manager, or other administrator from prohibiting a pharmacist or pharmacy from discussing information relating to cost sharing or selling a more affordable alternative to the insured. Passed – signed by Governor 4/10/18 (Acts, ch. 144).
SB 5 AN ACT RELATING TO PHARMACY BENEFITS IN THE MEDICAID PROGRAM: Create a new section of KRS Chapter 205 to require the Department for Medicaid Services to directly administer all outpatient pharmacy benefits; prohibit renewal or negotiation of new contracts to provide Medicaid managed care that allow administration of outpatient benefits by any entity but the Department for Medicaid Services; reduce costs of future Medicaid managed care contracts by costs of all outpatient pharmacy benefits as they existed on January 1, 2017; allow the department to utilize managed care principles and techniques to assist with member medication adherence and cost control; require the department to establish a reasonable dispensing fee pursuant to Centers for Medicare and Medicaid Services guidelines. Passed – signed by Governor 4/13/18 (Acts, ch. 157)
2015-2016 HB171

 

AIR AMBULANCE CLAIMS DIRECTORY: would require the Kentucky Board of Emergency Medical Services to annually obtain charges billed by all air ambulance providers licensed and operating in the state and deem the information as proprietary and not subject to the Open Records Act; to determine the average cost of air ambulance services in the state which shall be subject to the provisions of the Open Records Act; require the board to submit the average cost to the commissioner of the Department of Insurance; authorize the board to promulgate administrative regulations to establish a form to be completed by all air ambulance service providers to determine average cost of services; and require any air ambulance service providers licensed and operating in the state to comply with the submission of charges requirement.

HB171 would also require health benefit plans to prominently provide a notice in each contract for coverage whether the contract covers air ambulance service and, if provided, the dollar amount of coverage; and require the commissioner of the Department of Insurance to review all health benefit plans for compliance with the notice requirement and to provide the average cost of all ambulance services to all health benefit plans every three years.

Inactive— Died.

 

Healthcare Cost

2018 HR 101 Encourage the United States Congress to pass legislation that permits the United States Centers for Medicare and Medicaid Services to negotiate with pharmaceutical companies for fair and reasonable prices on prescription drugs Inactive/Dead – 1/25/18.
SB 79 AN ACT RELATING TO SURPRISE BILLING: Requires the commissioner of insurance to collect information from insurers regarding billed charges, and either to select a nonprofit to distribute the information to or to publish the information annually on its Web site; defines unanticipated out-of-network care, and to require an insurer to reimburse for unanticipated out-of-network care at the usual and customary rate for the service; prohibit any lower reimbursement; prohibit balance billing from a provider who has been reimbursed in accordance with this section; allow a provider to bill for any applicable cost-sharing requirements owed by the insured. Inactive/Dead – Referred to Banking & Insurance 1/16/18
SB235/ SB 236 AN ACT RELATING TO SURPRISE BILLING: To require health benefit plans to cover certain nonemergency health care services provided by a nonparticipating health care provider to a covered person at an in-network facility at the in-network rate; prohibit nonparticipating health care providers from attempting to collect payment from a covered person for covered services; provide reimbursement criteria for covered services provided by a nonparticipating provider at an in-network facility; to require insurers to require any provider contracts with in-network health facilities requires the provider to accept the in-network rate as payment in full; to prohibit balance billing the covered person beyond their in-network cost sharing; To require nonparticipating health care providers accept the in-network reimbursement rate for emergency services provided at an in-network facility as payment in full. Inactive/Dead – Referred to Banking & Insurance 3/5/18.
SB 261 AN ACT RELATING TO EMERGENCY AIR AMBULANCE COVERAGE AND DECLARING AN EMERGENCY: To require a health benefit plan to hold harmless an insured for any amount owed to a registered air ambulance provider; prohibit a health benefit plan from using an allowed amount for air ambulance services under certain conditions to determine when an air ambulance transport is medically necessary; require assumption of charges by the insurer under certain conditions; require notification to the air ambulance service of assumption by the insurer; prohibit the air ambulance provider from certain actions following receipt of notification; establish payment requirements for the insurer; prohibit an insurer from using debt owed by a consumer to an air ambulance provider in determining insurance rates. Inactive/Dead – Referred to Banking & Insurance 3/5/18.
HB 135 AN ACT RELATING TO EMERGENCY AIR AMBULANCE COVERAGE: To prohibit a health benefit plan from using an allowed amount for air ambulance services under certain conditions, to determine when an air ambulance transport is medically necessary, to require assumption of charges by the insurer under certain conditions, to require notification to the air ambulance service of assumption by the insurer, prohibit the air ambulance provider from certain actions following receipt of notification, to establish payment requirements for the insurer. Inactive/Dead – Referred to Banking & Insurance 1/8/18.
HB 395 AN ACT RELATING TO EMERGENCY AIR AMBULANCE COVERAGE: To prohibit a health benefit plan from using an allowed amount for air ambulance services under certain conditions, to determine when an air ambulance transport is medically necessary, to require assumption of charges by the insurer under certain conditions, to require notification to the air ambulance service of assumption by the insurer, prohibit the air ambulance provider from certain actions following receipt of notification, to establish payment requirements for the insurer. Inactive/Dead – Referred to Banking & Insurance 2/22/18.


Healthcare Markets

2018 SB 112/HB 12

 

AN ACT RELATING TO TELEHEALTH. Create a new section of KRS Chapter 205 to require the cabinet to regulate telehealth; set requirements for the delivery of telehealth services to Medicaid recipients; require equivalent reimbursement for telehealth services; require provision of coverage and reimbursement for telehealth. Passed – Signed by Governor 4/26/18 (Acts, Ch. 187)
HB 85 AN ACT RELATING TO ELIMINATION OF THE CERTIFICATE OF NEED: To delete reference to the certificate of need and the state health plan; to delete requirement for certificate of need; to delete exemptions to the certificate of need; to replace the Kentucky Health Facilities and Health Services Certificate of Need and Licensure Board with the Cabinet for Health and Family Services. Inactive/Dead – Referred to Health and Family Services 1/4/18.

 

Key Statutes

We compile state statutes relate to healthcare price and competition, including healthcare transparency, markets, and costs. For a complete listing of all health related statutes visit the State Health Practice Database for Research.

Transparency in Healthcare

  • Stat. Ann. § 216.261 creates the Kentucky Health Care Infrastructure Authority, to be operated jointly by the University of Kentucky and the University of Louisville. The Authority is charged with providing leadership and expertise in the redesign of Kentucky’s healthcare delivery system vis-à-vis improved information technology infrastructure, and to conduct research to determine the impact of said improvements on healthcare quality and costs.

 

  • Stat. Ann. § 216.267 creates the Kentucky e-Health Network Board to oversee the creation of a Kentucky e-health network (“Ke-HN”) under the auspices of the Kentucky Health Care Infrastructure Authority. The Ke-HN is envisioned to support electronic transactions and activities such as electronic access to lab results, disease tracking, links to drug formularies and cost information, medical records transferal, and links to patient educational materials.

 

 

  • Stat. Ann. § 216.2929 directs the Cabinet for Health and Family Services to annually publish information on charges for healthcare services on its website in order to permit consumers to make comparisons between healthcare facilities.

 

Healthcare Contracting

  • Stat. Ann. § 304.17A-560 prohibits most favored nation provision in an agreement between an insurance carrier and a participating provider except in cases “where the commissioner determines the market share of the insurer is nominal.” A most favored nations clause is an agreement between a payer (such as an insurance company) and a provider that typically requires a provider to give the payer the lowest rate that it gave to any other comparable payer, which can be anticompetitive by encouraging oligopolistic pricing by large payers and increasing barriers for new entrants.

 

Healthcare Markets

  • Stat. Ann. ch. 216B et seq. prohibits health care providers from acquiring, replacing, or adding to their facilities and equipment, except in specified circumstances, without the prior approval of the Cabinet for Health and Family Services through the state’s Certificate of Need process. A Certificate of Need regime aims to reduce healthcare overheard by reducing unnecessary or duplicative services, but can be anticompetitive by increasing regulatory barriers for new entrants.

 

  • Stat. Ann. § 304.17A-270 prohibits a health insurer from discriminating against any provider who is located within the geographic coverage area of the health benefit plan and is also willing to meet the established terms and conditions for participation in the plan.

 

2016-2018 BUDGET

Annual appropriations are made in the biennial budget bills. The state’s fiscal year begins July 1 and extends to the following June 30. Kentucky enacted the 2016-2018 biennium budget in the regular 2016 legislative session. To view Kentucky’s spending on health and family services, visit pages here.

 

LITIGATION/ENFORCEMENT

  • None identified.

 

KEY RESOURCES

Kentucky State Legislature

Kentucky Office of the Attorney General

Hospital Discharge Database