Letter to Alberta Health Re: Life and health insurers' key questions regarding proposed pharmacare program in AlbertaRelease Date: 03/22/2013 Staff Reference: Stephen Frank
March 22, 2013
Ms. Michele Evans
Pharmaceutical Funding and Guidance
11th Floor, Telus Plaza North Tower
Dear Ms. Evans,
Re: Life and health insurers' key questions regarding proposed pharmacare program in Alberta
Thank you for taking the time to speak with me recently about the proposed introduction of a new pharmacare program for the province of Alberta. As we discussed, the introduction of a new supplemental health benefits program in Alberta will have important implications for private insurance in the province. We have a number of questions about the key design elements of what is being proposed that will help us to better understand your proposed approach. We highlight these questions for you below and would be very pleased to meet with you in person to discuss these issues in more detail at your earliest convenience.
In addition, we would also like to take this opportunity to thank the Government of Alberta for continuing to support the sustainability of private plans with the reduction in generic drug pricing.The continued reduction in generic prices will have important positive benefits for the ongoing sustainability of supplemental drug coverage in the province.
The Canadian Life and Health Insurance Association (CLHIA) is a voluntary trade association and our members account for 99 per cent of the life and health insurance in force. At the end of 2011,there were over 18,000 group supplementary health plans in Alberta that covered 2.7 million people with supplementary health benefit coverage. Cumulatively, the industry reimbursed in excess of $2.5 billion to Albertans for supplementary health benefits as follows:
- Prescription Drug Benefits: $1.0 billion,
- Dental Benefits: $980 million,
- Paramedical Benefits: $223 million,
- Hospital Accommodation Benefits: $118 million,
- Vision Care Benefits: $95 million, and
- Travel Insurance: $80 million.
At a minimum, implementing a new public supplemental health program in Alberta will require that all private supplemental health plans be reviewed and potentially redesigned according to the new provincial program. At a high level, the industry will need to:
- redesign the benefit plans offered to individuals and employers for supplemental health coverage,
- review and possibly revise existing contracts,
- communicate with and train brokers and agents,
- communicate with plan sponsors and transition them to the new benefit plan offering, and
- implement new administrative practices, claims and changes to administration systems. The size of this effort will depend critically on the administrative details of the new pharmacare program.
The following questions assume that Alberta will model the new pharmacare program on the approach taken in British Columbia. The key elements of the model in B.C. are that:
- household income-based deductibles apply,
- the province is the first payer once the individual's income-based deductible is met, and
- individuals can purchase private insurance coverage against the costs of their income deductible and co-payments.
Please note that if any of these core design elements are not implemented in the Alberta pharmacare model, then we would have additional questions that we would need to address with you.
1. How will the program be coordinated between private insurers and the public plan?
- Will the new pharmacare program apply to all individuals automatically, or only to those that register
- Will the province allow a one-time (lifetime) registration?
- If a resident does not register, will they be set at a high deductible, similar to the $10,000 deductible in B.C.?
- Will the new pharmacare program apply equally to seniors?
- Will the deductibles be on an annual, semi-annual or quarterly/ basis?
- Note: The industry's preference would be for an annual deductible limit.
- Will there be a separate deductible for drugs?
- Note: The industry’s preference would be for a separate deductible for drugs due to the high volume of drug card driven business.
- Will there be a separate deductible for drugs?
6. Will the program support a process whereby the pharmacist is required to submit all prescriptions to the program first? This would mean that only amounts not paid by the program are submitted to a private plan.
- For example, in BC, pharmacists file all prescriptions with BC Pharmacare first and then the BC Pharmacare system adjudicates on behalf of the public plan. The pharmacist then sends another transaction to the private plan and includes the amount reimbursed by the public plan (previously paid field) along with the appropriate intervention code.
Thank you for your attention to this important matter. As mentioned, we would be pleased to meet with you at your earliest convenience to discuss these questions in more detail. We are also more than happy to provide you with any additional information that you would find of use as you continue your work towards implementing this important change for Albertans.
(Original signed by)
Vice President, Policy Development and Health