Kentucky is one of several states that enacted a law to require the amount of a drug manufacturer’s financial assistance (e.g., coupon, discounts, or vouchers) to count toward an enrollee’s cost-sharing, such as an out-of-pocket maximum, deductible and copay. The law’s implementation date is January 1, 2022, and it intends to prohibit “copay accumulator programs” in an effort to protect consumers.

Copay accumulator programs are sometimes implemented by insurers and PBMs in order to exclude prescription drug manufacturers’ coupons and other forms of financial assistance from counting toward a health plan enrollee’s annual cost-sharing limit, which disadvantages enrollees.

Besides Illinois, Kentucky was the only state to recognize that their law that prohibits copay accumulator programs conflicts with the federal law’s qualified HDHP/HSA eligibility rule. The federal rule states if an enrollee receives the drug manufacturer’s financial assistance before satisfying the enrollee’s annual deductible, the enrollee becomes ineligible to contribute to their HSA. In light of this, the state issued guidance (Bulletin 2021-002) to clarify that the state’s copay accumulator programs prohibition bill does not apply to qualified HDHPs when they are coupled with an HSA.

Therefore, insurers and PBMs are required to count prescription drug manufacturers’ financial assistance towards enrollees’ cost-sharing when a plan is not a qualified HDHP/HSA and issued in Kentucky.

Kentucky Senate Bill 45 »
Bulletin 2021-002 »

On June 17, 2020, the Department of Insurance provided Advisory Opinion 2020-005, which speaks to the coordination of benefits within the first 31 days of the birth of a child. Specifically, the opinion references state statutes that require coverage for the first 31 days of a child’s life, regardless of whether the parents have family coverage. The department takes the position that if only one parent elects coverage for the newborn, the child is not covered by two plans. However, if neither parent makes an election, then the child is covered by both parents’ plan and there would be coordination of benefits.

This opinion will apply to fully insured plans written out of Kentucky. Plan sponsors should be aware of this guidance.

Advisory Opinion 2020-005 »

On March 23, 2020, the Department of Medicaid Services provided guidance on telehealth and telephonic health services. The FAQs provided updated guidance indicating that due to the declared emergency, telehealth can now be used for services for which it could not be used before. It also provides guidance on how providers should comply with HIPAA through the use of these services.

While the majority of this guidance speaks to what services Medicaid will now recognize, employer plan sponsors should familiarize themselves with the guidance since insurers and providers will now be required to recognize the provision of these services via telehealth.

Provider Telehealth or Telephonic Health Services FAQ »

On March 9, 2020, Gov. Beshear issued an executive order requiring insurers to waive all cost-sharing payments for the screening and testing for COVID-19. Insurers must also waive any prior authorization requirements for screening and diagnostic testing for the virus. Additionally, when a drug to treat COVID-19 is formulated, insurers must allow participants to refill their prescriptions even if the prescription was recently filled. Employers can notify plan participants who may need to receive testing that the testing will be provided without cost sharing.

Executive Order 2020-220 »

On Oct. 18, 2018, Commissioner Atkins released Bulletin 2018-02 to remind carriers and producers that issue policies in Kentucky of the state insurance requirements for short-term health insurance. This bulletin is intended to remind carriers doing business in the state that state law isn’t preempted regarding short-term health insurance and, thus, carriers doing business in Kentucky must continue to comply with state law.

As background, the federal government issued a rule in August 2018 that extended the initial contract term of short-term policies issued on or after Oct. 2, 2018, to be no more than 12 months while limiting renewals or extension of such policies to no more than 36 months. Like the federal rule, Kentucky law limits a short-term policy to a term that is less than 12 months, and a maximum 36-month duration (including renewals and extensions, if applicable) for the same contract. Moreover, in Kentucky, short-term policies are subject to state coverage mandates.

The Department also included a reminder that the commissioner may disapprove any form or withdraw previous approval where the benefits provided within an individual health insurance policy (i.e., short-term health insurance policy) “are unreasonable in relation to the premium charged.”

This bulletin was for informational purposes only, and employers need not take any action at this time. The intent is to remind carriers that Kentucky insurance law continues to apply to short-term health insurance, and carriers must factor in Kentucky requirements and recommendations before issuing a product in response to the federal guidelines.

Bulletin 2018-02 »

On April 10, 2018, Gov. Bevin signed HB 218 into law, which amends the rules for health benefit plans issued or renewed on or after Jan. 1, 2019. Specifically, plans must still provide coverage for the diagnosis and treatment of autism spectrum disorders. Further, insurers can't terminate coverage or refuse to deliver, execute, issue, amend, adjust or renew coverage for a plan participant solely due to a diagnosis of or treatment for an autism spectrum disorder. This new law also removes maximum annual benefit limits, including any limits on the number of visits to autism service providers, and removes age limitations on coverage.

Although this new law is aimed at insurers, it’s important for employers to be aware of what insurers may be doing and what they’re now required to do when issuing policies.

HB 218 »

On April 10, 2018, Gov. Bevin signed HB 463 into law, which provides that insurers or pharmacy benefit managers can't impose cost-sharing amounts on prescription drugs that are greater than prescription drug prices for participants not using plans or paying cash.

Insurers or pharmacy benefit managers also can't penalize pharmacy providers that provide plan participants with information relating to the applicable limitations on their cost-sharing expenses for prescription drugs.

Although this new law is aimed at insurers and pharmacy benefit managers, it’s important for employers to be aware of what insurers and pharmacy benefit managers may be doing and what they’re now required to do.

This law is effective for insurers (and pharmacy benefit managers) issuing or renewing health benefit plans on or after Jan. 1, 2019.

HB 463 »

On April 26, 2018, Gov. Matt Bevin signed SB 112 into law, requiring health insurers in Kentucky to pay for covered services delivered by telehealth or telemedicine technology as long as the services and providers are otherwise covered.

"Telehealth" means the delivery of health-care services by health-care providers licensed in Kentucky to plan participants through face-to-face encounters using real-time interactive audio and video technologies or store-and-forward services provided via asynchronous technologies as the standard practice of care where images are sent to specialists for evaluation. Telehealth doesn't include email, text messaging, fax transmissions or audio-only telephone calls.

These services will be subject to annual deductibles and coinsurance, and other terms and conditions of coverage, in the same way already established for the same services when not provided via telemedicine or telehealth.

This law is effective for plans issued or renewed on or after July 1, 2019.

SB112 »

The Kentucky (KY) Department of Insurance published Insurance Bulletin Number 2017-03. The bulletin summarizes the changes made by the KY legislature during 2017. Outlined below are the legislative changes described in the bulletin relating to health insurance coverage — including those previously covered in Compliance Corner. The effective date of the legislation discussed below is June 29, 2017.

The first legislative change relates to experimental treatment for terminal illnesses and was contained in SB 21, which was signed into law by KY Gov. Matt Bevin on March 21, 2017. Specifically, this law allows manufacturers of investigational drugs, biological products and devices, as defined in the bill, to make them available upon request to eligible patients. Patient eligibility depends on a number of factors, including whether they have:

• A terminal illness that’s attested to by the patient’s treating health care provider
• Considered all other treatment options currently approved by the U.S. FDA
• Received a recommendation from the patient’s treating health care provider for an investigational drug, biological product or device
• Given written informed consent for the use of the investigational drug, biological product or device
• Documentation from the treating health care provider that the patient meets these requirements

As part of the informed consent process, the patient agrees that their health plan, third-party administrator or provider will not be liable for the cost of such treatment or any care consequent to the use of such treatment (unless otherwise required). The bill does not expand or mandate coverage for such treatments by an insurer, but it authorizes health plans, administrators and governmental agencies to provide coverage for these types of services.

The second relates to garnishment and health savings accounts. On March 27, 2017, KY Gov. Matt Bevin signed SB 62 into law, amending KRS 427.010 by including an exemption from wage attachment and garnishment for funds deposited in a health savings account under IRC Section 223.

The third legislative change relates to smoking cessation. On March 21, 2017, Gov. Bevin signed SB 89 into law, which requires insured group health benefit plans to provide coverage for certain smoking cessation medications and services. Specifically, plans must provide coverage for all tobacco cessation, including:

• Medications approved by the U.S. FDA
• Services recommended by the U.S. Preventive Services Task Force, including, but not limited to, individual, group and telephone counseling or any combination of these services

Additionally, coverage for tobacco cessation services can't be subject to any of the following:

• Counseling requirements for medication
• Limits on duration of services, including but not limited to annual or lifetime limits on number of attempts to quit
• Copayments or other out-of-pocket cost sharing, including deductibles

Utilization management requirements cannot be imposed on any tobacco cessation services, including prior authorization and step therapy, except in the following circumstances where plans can require prior authorization:

• For a treatment that exceeds the duration recommended by the most recent U.S. Public Health Service clinical practice guidelines on treating tobacco use and dependence; or
• For services associated with more than two attempts to quit smoking within a 12-month period

The fourth change was contained in HB 78, which was signed into law by Gov. Bevin on April 11, 2017. This law requires insurers that provide individual, expense-incurred policies (under KRS Chapter 304.17), health benefit plans (under KRS 304.17A) and group plans (under KRS 304.18) to include coverage for digital mammography. The benefit is limited to $50 per mammogram, and any deductible and coinsurance are required to be “no less favorable than for coverage for physical illness.”

Physicians are now statutorily encouraged to utilize digital mammography (i.e., breast tomosynthesis) when ordering mammograms. The definition of “mammogram” pursuant to KRS 304.17-316 now incorporates digital mammograms.

The bulletin and new laws do not contain any new employer compliance obligations. But KY employers will want to be aware of the changes to the insurance laws in KY should employees have questions regarding health insurance coverage.

Insurance Bulletin Number 2017-03 »
SB 21 »
SB 62 »
SB 89 »
HB 78 »

On March 27, 2017, Kentucky Gov. Bevin signed legislation (SB 62) into law amending KRS 427.010 by including an exemption from wage attachment and garnishment for funds deposited in a health savings accounts under IRC Section 223.

The law takes effect 90 days after close of the Kentucky legislative session, which is projected to be on or about June 29, 2017.

SB 62 »