STAND. COM. REP. NO. 485

Honolulu, Hawaii

RE:    S.B. No. 1407

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Health, to which was referred S.B. No. 1407 entitled:

"A BILL FOR AN ACT RELATING TO PRESCRIPTION DRUG PLANS,"

begs leave to report as follows:

     The purpose of this measure is to impose regulatory oversight over prescription drug plans that are authorized to sell prescription drug benefits by the Centers for Medicare and Medicaid Services pursuant to Medicare Part D.

     Your Committee received testimony in support of this measure from the State Insurance Commissioner and Hawaii Medical Service Association.

     This measure provides for a process for licensing, establishes minimum solvency and financial reporting requirements, and allows the Insurance Commissioner to take control of an impaired plan.  These are basic elements of insurance regulation to protect the public.

     Your Committee finds that certain prescription drug plans are selling drugs in Hawaii pursuant to the Medicare Modernization Act, which established the drug benefit of Medicare Part D.  Some companies selling drugs as prescription drug plans have a certificate of authority as a mutual benefit society, a health maintenance organization, or a for-profit insurer.  However, other companies are operating solely as stand alone prescription drug plans under a limited authorization from the federal government.  Under the Centers for Medicare and Medicaid requirements, these plans have a window of three years to become authorized under state law and must be licensed by December 31, 2009, unless the State chooses not to have a licensing process for prescription drug plans.  In order to provide this process for authorization and to bring these entities under regulatory oversight, enabling legislation is required to license stand-alone prescription drug plans. 

     Your Committee has amended this measure by making technical, nonsubstantive amendments for purposes of clarity and style.

     As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1407, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1407, S.D. 1, and be referred to the Committee on Commerce, Consumer Protection, and Affordable Housing.

Respectfully submitted on behalf of the members of the Committee on Health,

____________________________

DAVID Y. IGE, Chair