Thank you. >> Thank you very much. I'm sure the rest of the panel has lots of questions and we'd like to give them a chance to get there. I do want to point out to anybody who's watching the clock that it's off by about an hour. >> It's actually 10:45 not 9:45 so anybody has an appointment just add an hour to whatever you see on that clock or go by your phone or watch.
I'd like to start with the 30,000 foot question and then get down into some of the details. The big issue that confronts me every time I think about this and my colleagues, and Will can attest to this, it's a question across the country. Given the fact that there is an essential health benefits cap, taking that aspect of it, what about health care innovation? How do we account for that, how do we build it in when we're developing a benchmark plan that is defined essentially by 2011 benefits, and then renewed in 2016, 2017 essentially based upon a plan that was still designed in 2011. A lot has changed. So how do we account for that without incurring tax payer expense or even if we decide to incur tax payer expense, what is the process of going about doing that? I think Troy's taking the ball on that. >> Sure, chime in, very important question because of course we want the best care for our citizens. I think that the legislature in its wisdom a bunch of years ago has set up a really great mechanism to deal with advances in technology, right now the categories of benefits are fairly comprehensive, quite comprehensive in New York.
So we cover a broad range of general services, so just take surgery for example, so surgeries are all covered and let's say a new technique comes up that greatly advances the ball on surgery. Well, the way we handle it in New York, the way we always have handled it is through Article 49 of the Insurance and Public Health law. A health insurer is required to cover surgery, which means whatever is medically necessary to treat that surgery. If there's a dispute between what the health plan thinks is medically necessary or if the health plan very often for new services will say, hey that's experimental or investigational, so we're not going to cover it.
There's an appeal process. There's both, there's an internal appeal first and then you got an external appeal so there's an independent third party physician that judges and says is this experimental? Or is this state of the art medicine? Is it medically necessary or is it not medically necessary? We're not just going to take the health insurers word for it, but all these benefits evolve with the technology, they don't get that specific in terms of what specific technologies are or aren't included as a general rule.
So, I believe that there is room for growth as technologies and medical evidence develops over time. So that, I mean I think that's the most fundamental answer to that question. If there's certain categories of benefits, like a type of service as opposed to a method of delivering that service, I guess we can, you know, we can always talk about that, but you know, as we've said the, it's quite comprehensive coverage. The things that aren't covered are some of those things that I already listed like child locator devices, private duty nursing, acupuncture, things like that which I think reasonable people could certainly discuss should those be included or not.
But the basic technology for all the broad range of services that are covered from you know, emergency, inpatient hospitalization, all the outpatient and primary care, that broad coverage evolves as the technology evolves. So should the coverage underlying that, so that's kind of my answer to that question, Donna, I don't know if you have anything to add? >> I don't know that I have anything to add I would certainly agree. I mentioned that Milliman counted that there were about 45 categories of service that are covered under the essential health benefits. And I think, I would suggest every technology has to be looked at on a case-by-case basis. I think the first view of it should be whether or not that medical advancement or technology fits within one of those categories of service that's already covered. And so, I would agree with Troy, that if we were to look at a category, happened to be looking at infusion therapy, happened to be looking add a whole list of services here in the Milliman Report.
That would, I think, be the first task and then if, in fact, the service is medically necessary, given the circumstances, and it falls within in a category of service, I think the way that the benefits are constructed, coverage would evolve to include that. And then Troy has described that due process available to consumers, in the event an insurer were to find that that wasn't covered. So, in short, I would say, I think that is, on a case by case basis, the way I would submit, we would approach new technologies first. >> Okay, so I think I understand what you're saying is that under Article 49 of the Public Health Law, we provide broad categories. And I think you're using a tool that we've actually discussed in the Legislature of saying it's definitional as opposed to saying it's an expansion.
But this is for medically necessary procedures, medically necessary protocols and approaches. What about those things that are not necessarily determined to be medically necessary or those things that were beyond the reach of something in 2011. Technology has certainly one aspect of it but we have a very interesting, it was actually and article in today's paper about a company that has an idea about using medical marijuana for opiate treatment and they are trying to advance that. But, certainly we in the state have come to accept and understand the primary need for people in our state to have access to medical marijuana under certain circumstances, particularly children In 2011, that wasn't in anybody's purview. So therefore, it's my understanding that it's not currently covered by health insurance, and would be a new benefit determined to be medically necessary, I can't say for sure whether that's something that would fit into that Article 49 definition. But how would we go about making a determination that we wanted to add a benefit? And just to take that a little further than just the medical marijuana issue, I calculated that there are 19 bills pending in the assembly and the senate right now that would add a variety of new benefits covering all kinds of things.
I have one for Lyme disease. I also have one to assure comprehensive coverage for contraceptives. And I want to come back to that because it touches on part of the testimony that was offered. Prosthetic devices for military personnel. Prosthetic devices generally. Substance use disorder treatment services. Hysterectomies, lymphedema, cranial prostheses, hair prostheses. Infant and baby formulas, autism, hearing aids, hearing aids for children, colorectal cancer detection, early detection. Genetic screening for breast cancer, ovarian cancer, prostate, colon and lung cancer. And that's genetic testing. Diagnostic testing for ovarian cancer. I don't know even how to say this word. I guess it's autologous blood transfusions. >> Autologous. >> Thank you, I knew I said it wrong. >> Opiate addiction treatment medication and colorectal cancer early detection.
The jury's out on the medical necessity of some of those proposed benefits. But there's no question that each and every one of them have some really significant merit. We in the legislature have felt as though our hands are completely tied by the Essential Health Benefits cap of reaching out to those areas where we cannot get some sort of consensus. That we would be applying the same analysis that you just said. That it's definitional as opposed to actually being a new benefit. So, I have to, and they'll be testifying soon, applaud the insurance companies for their flexibility in allowing us to use the word definition in a very broad way as we approach this. But it seems like just trying to fit a square peg in a round hole, when there should be other ways.
So, separate and apart from medical necessity. It's separate and apart from those things that are specifically defined in article 49. How would you propose we go about taking a look at advancements, not just in procedures, not just in processes or methods of delivery, but also in maybe even things that didn't exist? Genetic testing was not broadly existing in 2011. It's proving to be very, very, verery effective in some areas right now. Medical marijuana was not considered in 2011. We didn't think about the needs of returning women veterans in their 20s who were of child bearing age.
And the impact that has on their prosthetic devices, as compared to the mandate that already existed in the law. So, there's a wide variety. How would you go about approaching those things that don't fit in to that box that you just described? >> Well, I'll start by saying, we have have a federal law, right? So, what the federal says is, any benefit that's sort of like a service, or treatment, or a category of care that is not currently in the EHB that you add to it, the state needs to defray the cost. So, that's just plain and simple federal law. >> That's why we're here. >> That's why we're here. >> So in terms of technologies they were talking about, and advancements, I can't get into each of those.
You listed a lot of different things. And happy to have the discussions offline about particular bills. But in general, if we're talking about sort of a modality of how that service is going to be provided. I know we all work together on the TeleHealth bill. So, to make sure that if a service is provided by TeleHealth, that it wouldn't be denied simply because it was being provided by TeleHealth. I mean, if it was otherwise medically not necessary, of course it could be denied.
And I think the legislature, in its wisdom, has long held there's a process. And a permitted exclusion for non-medically necessary coverage. I guess for the obvious reason that we don't want to burden rate-payers, consumers, with having to pay for coverage that isn't medically necessary. But the bottom line is, is we can do mandates around delivery methods, around cost-sharing, around definition of dependence. Around types of providers- >> I got all that from your testimony, Troy, but I'm talking about the other stuff that doesn't fit into those exemptions. Telemedicine is exempted, dependent definition is exempted, those things are exempted, but what about the things I mentioned? How do we go about doing that? I understand that we have a federal mandate that we're operating under. The problem we have, is that we in New York State, and I think in every other state, have chosen to just be frozen. And not deal with these issues as opposed to coming up with a methodology. And I'm not putting this on the department, I'm saying the legislature. I do it with my colleagues.
I say, don't even bother coming to me with a new benefit, because the Essential Health Benefits cap prevents us from doing it. Because there's no mechanism even in the state of New York to determine what those benefits cost. And by the way, not just the state of New York, I think in any state. To determine what those benefits cost and to put in place the means by which we pay for them. I heard in your testimony the devices you would use to make a determination, but they still didn't address, are we talking about any costs whatsoever? Are we talking about like cost that could be balanced out over the policy year? Are we talking about a cost that reduces costs over the lifetime of the patient? We don't even have that definition, so we don't even know how that's computed? In addition to that, we don't know how we can limit those costs. Are their devices that would offset the additional costs? And are we allowed to off set base upon, avoid a cost for other aspects of healthcare? So we don't have those answers either for those things that don't fit into the definitions that you've defined, or are not part of the exceptions that you laid out in your testimony.
Do you have a- >> Well, and I don't want to repeat my testimony. I mean, we did talk about how you would calculate the costs generally. And whether we as a state like it or not, it might help to sort of understand, at least my understanding, of the rationale for why this rule was in the ACA. And I think that the fundamental idea is that part of the ACA, there's a bargain, right? The bargain is, everybody needs to get coverage. There's going to be a mandate with a penalty attached to it, a tax penalty if you don't enroll in coverage. The flip side is, we're going to help you pay for it. The advance premium tax credits on a sliding scale up to 400% of the federal poverty level. You get a tax credit. But what the, and that's Federal money, and what I think the Federal Government, when they voted on the ACA, was concerned about was states piling on new benefits that would end up having to come out of, the Federal Government would have to pay for those, and would be different in different states in that way.
So that's kind of the underlying rationale for it as I understand it, or at least one of the rationales. Bottom line is, if it is a mandate that affects a service or a category of care and adds that new category on, we do have to pay for it with state dollars. And the way it gets calculated is really each insurer does that calculation on their own, and they have to use those three things that I mentioned. It has to be done by society of actuaries, somebody accredited in the society of actuaries. It has to be based on generally acceptable actuarial principles. And thirdly, they need to report it to the state. So- >> So just to help me out here on the three categories that I mentioned.
Any costs whatsoever, a cost over the life of the policy year, a cost over the life of the patient. Which is the appropriate measure, or is it none of the above, or is it something else? >> They would look at the policy year, so- >> The policy year, so it's a cost of in a given year. So if there is a new protocol or a new drug, or something that was not a covered benefit and is not part of the essential health benefits plan, and it was determined that it would save money over two years, three years, five years, the life of the patient, >> that's not an acceptable measure.
It is within a single policy year. So, is that a correct understanding of what you- >> I mean, it's based on, the way the federal regs are written is that it's based on premium impact, and premium's calculated year by year, so- >> Okay, so, that, that's, okay, I understand that. So am I understanding you to say, and [UNKNOWN] please jump in anytime you want, that you feel that the department's position is that if something is not an essential health benefit right now, that the state is constrained from adding any additional benefits unless that would cost something in a single premium year, unless the state is prepared to place the cost of that benefit on the taxpayers, as opposed to the rate payers or the plans? >> Well, I wouldn't say it's the departments position, I would say it's- >> Well that's what you're here for- >> It's the federal government's position, that- >> I'm sorry, say again? >> I would say it's the federal government's position that we're, I'm here interpreting their position or telling you their position.
So it's not like this is coming from the state- >> No, I'm not trying to play gotcha. I'm just asking if that's your interpretation of the Federal Law. >> Yeah. >> That there are no other options at your constraint. >> Other the ones that we talked about? >> Okay, [UNKNOWN] do you share that opinion? Well, I think certainly that it's our interpretation, too, of the federal requirements that additional categories of service over and above the essential health benefits are to be paid for by the state. To your question on the calculation, I don't know. I've not personally spoken to any state that's done this calculation yet or had it vetted with the federal government. On the basis, I can tell you what we do in the marketplace, for example. I mentioned that one of the marketplace implications in Troy, I think, to describe the rationale for this federal rule around additional categories of service being added to the HB. One of the calculations that we must do is if, when we calculate the federal tax credit, if the second lowest cost silver plan available to a consumer, which is the basis for the tax credit, includes services that are not part of the HB, so for example, it includes adult dental, adult vision, acupuncture, we must separately identify within the premium the amount of premium attributable to that benefit.
We do that in collaboration with the insurance company and with DFS. And it is subtracted in effect from the premium cost we calculate the tax credit. So if that premium was $300, and that particular benefit over and above the essential health plan was $2, then the second lowest cost of silver becomes $298. So, just in my way of thinking, given that is how we have to do that for marketplace calculations, I could envision that there would be a similar kind of separate identification within premium of the cost of the service that is attributable to a state insurance mandate. >> So, I still have another general question. I'm going to reserve it til after my colleagues get a chance to talk to you about going back over some of your testimony to ask you questions.
But I have a second question on this score. Assuming that your interpretation is correct, and I don't doubt that it is for a moment, that the Federal Government constrains the states from developing benefits outside the mandate, outside the essential health benefits cap, unless the state is prepared to pick up the cost of those benefits for additional cost in a premium year. I'm not sure I agree with you on the premium year part, but I don't know where that came from in the Federal government, but I do understand your interpretation that got you there. There is a process, a 1332 waiver process, that's taking place in addition to having to renew your assent to health benefits plan for 2017, states across the country are applying for waivers of the federal mandate that would allow them to make modifications from those rules that the federal government has laid out, so long as it does not increase the federal deficit. Are you familiar with the 1332 process? >> I am, yeah. >> Okay, and several states have decided to pursue that for a variety of reasons. I think inherent in what some of them have done is there would be an expansion of essential health benefits.
Has New York state considered using the waiver process to enhance benefits to keep up with modern protocols and standards, technologies, sensibilities, and opportunities? >> We are certainly, and along with my colleagues at the Department of Health, familiar with the 1332 waivers, and generally with a number of different approaches states are seeking approval to implement under 1332. I think that, Chairman, you really nicely summarized the 1332. And part of it is that there needs to be a demonstration that the modification doesn't impact the federal deficit. So I think we are open to looking at a range of different modifications that could be made under a 1332 waiver. I think at this point, at least I'm not certain what's approvable. I think we still don't know that from the HHS and the range of modifications that were approved.
We certainly would need whatever the 1332 is seeking to modify to be able to make the case. That it hasn't increased the deficit which, I think, by definition, it follows that it hasn't resulted in an increase to the federal tax credit. So I don't know if that would require it be offset by some other change, or another feature of the 1332. It is something we are certainly open and willing to having more discussion about. >> I just, hey Troy, did you want to add to that? >> No. >> Okay. I just want to, again, for edification of anybody that cares, about a dozen states have legislative waivers at some place in their houses. I don't know whether every state is using a legislative process to apply for waivers but I'll give you an example of what some of them are.
In Arkansas to allow and to facilitate innovative approaches to improving access to health insurance and health care. In California, to assure that individuals with certain immigration status can secure health care. In Colorado, to allow employers to contribute to the to the costs of health insurance in a greater way than they are currently required or allowed to do. Georgia to require that the departments that are applying for waivers notify the legislature before they do so, and seek the legislative permission to do so. In Hawaii, to put together resources to develop a means of doing a waiver. In Maine, this is an interesting one I think my colleague will be very interested in pursuing. To allow Maine to develop a universal single health payer plan. In Minnesota, alternatives to the state benchmark plan. Also in Minnesota to develop a universal single payer health plan. New Mexico to develop a working group again to come up with means by which the waver can be used to enhance health in this state. In Ohio to require the Superintendent of Insurance to apply for a waiver. In Oklahoma, to allow for multiple waiver submissions. In Rhode Island, this is a strange one given the size of Rhode Island, to take advantage of the economies of scale.
It just doesn't make, but, actually it does make sense when you read on, because it is to partner with other states allowing them cross borders, which currently something that's another subject. And then, interestingly, our good friends in South Carolina, just a bastion of progressive legislation, to prohibit any public body to participate in the establishment of a health exchange or to otherwise request a waiver. So actually South Carolina's legislation goes the other way. Vermont to create a public healthcare coverage option and to establish a payroll tax. Also in Vermont, a negotiated payment to hospitals. And in Vermont, to permit state businesses to continue purchasing state health benefits directly from insurance carriers. So those are some of the things that states are using waivers for. Inherent in some of them is that there would be a broadening of the benefits for every healthcare, health insurance consumer in the state.
Is New York considering applying for a waiver to enhance benefits, or for any other purpose? >> I would just, again, the Department of Health is looking at 1332 waivers. We're aware that states are looking at that relatively broad waiver vehicle to achieve a lot of changes either in their insurance markets in their state. In some cases we know that they're looking for coverage expansion. They're looking for coverage benefits. They're looking at other funding options. So again, I would say that we are looking at it. We're trying to gain a better understanding of what the opportunities are under 1332 waivers. We are certainly open and willing to discuss I think any and all ideas that 1332s might help us to achieve to improve the comprehensiveness of the coverage through essential health benefits or affordability or access.
>> Just a technical question on that front, and that is, is it the position of either of the agencies present here today. And I understand also, not that you're speaking on behalf of the Department of Health. But the Department of Health is comfortable having you representing their point of view. Is it the position of the agencies and the executive branch of government that waivers will require legislative action or will they not require legislative action? Applying for a waiver. >> Right right >> Well I can tell you that, you know, that my experience from other waiver environments, from waivers for Medicaid programs.
Is that they have generally been, the Commissioner of Health has generally been authorized by the state legislature to seek those waivers. So, I can just kind of speak from my experience in the past. >> I think, just based upon what certain states are doing, there's not unanimity of opinion over whether legislative bodies are required and it might be a subject of each individual state structure >> But I'd be interested to know, maybe you can follow up and let us know what the official position of the executive is.
Whether waivers will necessarily require the assent and participation of the legislature, whether it is the intention of executive agencies to seek waivers. And, if so, is it the intention of the agencies to bring those matters before the legislature, to get a legislative stamp of approval, so to speak and to make it something other than just an administrative process. My previous experience is yes, we've done it legislatively. I'm not quite sure if that was a process that came about because of the way the Medicaid laws are structured, because they've been consistently Medicaid waivers that we've sought. Or if it is just something else in the public health law or elsewhere that would require it. I would be very interested in hearing that. I do have some additional questions that are based upon some of the testimony you've already given, but I'd like to give my colleagues a chance to interact with you right now.
We will start with the chairman. >> Thank you. Well first of all just to get it out of the way and I'm sure everyone is on pins and needles whether I'm going to mention it. But when the New York Health Act becomes law, this is one of the many headaches we won't have to think about anymore. Enough said on that point for the morning. Just sort of a technical question. The various rules that would perhaps give us some guidance if we wanted to read what the feds have to say directly. Troy, you mentioned this in your testimony, 45 CFR 155.170? >> Yes. >> Yeah, okay. On the question of using Article 49 of either the public health law or the insurance law, they are identical, very convenient that the numbers matched up. In some ways it seems to me, it's kind of like what the late Justice Scalia would argue about originalists interpretation of the Constitution.
Does surgery mean what it meant in 2011? And of some new method of surgery, if physicists invent some new particle for doing particle beam surgery, would that be covered? Because it's under the word surgery, or not covered because in 2011 nobody thought of that? I hope I haven't given someone a bad idea for litigating an article 49 question. But I guess I would. I mean, what you would be saying under article 49, is when it said, when the mandate said surgery, in 2011, it meant surgery, as developed over time. And if some new kind surgery gets developed and your insurance plan wasn't covering it, Article 49 might tell them, yes, you have to cover it, because that's what surgery means, is that the thinking? >> I mean, well, we've always taken the position that, you know, if you look at the category of the benefit being provided, so it's a different method, like a particle beam surgery, it would fall within surgery. And the question would be, is that the benefit itself, if you look at the contract, it's fairly general, with good reason.
It doesn't talk about scalpel surgery, it doesn't talk about that method per se, it covers surgeries. And so the question is, would the particle beam surgery be medically necessary or not? And if the insurer, I guess, were to argue about, well, it's just not a covered benefit, it would really be up to the department to say no, it falls within definition of surgery. If the view was, well, that is just not a covered benefit, which, I can't think of an instance where something like that hasn't fallen within the scope of, say, surgery, or one of the major covered benefits. But if it were, then you'd have an internal grievance saying that, and the argument would be whether it is or isn't within the definition of covered benefits, but you're right, it could get to an interpretation, but I think we've always taken the position that a mode of delivery of that benefit falls within that benefit, and whether it's medically necessary or not, whether it's experimental or investigational or not, is something that's subject to Article 49 in that.
We as regulators aren't in the best position to determine what's medically necessary, that's why we have independent experts make that determination. I think the legislature wisely chose not to leave it just up to health insurers. That's why we have independent physicians taking a look at it and determining what in the current state of medicine is medically necessary or is experimental or not..
