IN THIS ISSUE:
This Week In Springfield, both chambers of the Illinois General Assembly reached their first committee deadline. Any legislation not passed out of the committee to which it was assigned is considered ‘held’ unless it specifically has its consideration deadline specifically extended. As with all deadline weeks, there was plenty of activity on bills of interest to Illinois retailers.
MEDICAID CUTS & STATE BUDGET
Illinois pharmacies are once again having their Medicaid reimbursement cut as the state attempts to close the $1.6 billion deficit in the state’s current fiscal year 2015 budget. When Governor Pat Quinn’s 2015 fiscal year budget was adopted last May, the appropriations were not adequate to cover a full year of spending at the current spend rate. Former Governor Quinn directed the agencies to continue to spend as if their budget was fully funded. It was widely assumed Governor Quinn would win re-election and a supplemental appropriation, including additional taxes, would have been passed in the November Veto Session to ensure the FY 15 budget was made whole. The voters of Illinois made a different choice in November meaning newly elected Governor Bruce Rauner inherited a current-year budget shortfall of approximately $1.6 billion.
This week, the four legislative leaders and their respective caucuses reached an agreement with Governor Rauner to address the FY 2015 budget shortfall. That agreement included sweeping $1.3 billion in monies from dedicated funds. Dedicated funds hold monies that are received by the state and put toward specific purposes. As an example, $250 million was taken from the Road Fund. This fund is used to fund road construction/repairs. According to the Illinois Department of Transportation, this sweep will leave this Fund with a balance that is considered lower than prudent but large enough to provide the required match for federal funds.
In addition to the dedicated fund sweeps, there was a 2.25% reduction of general revenue fund spending. Included in this across-the-board cut was another reduction in Medicaid reimbursement of $140 million. However, given the fact that only two or three months will be left in the fiscal year, the annualized reduction will result in an effective reimbursement cut of approximately 12% to Medicaid. At this writing, the Department is not certain how they will accomplish pharmacy’s portion of the cuts although it will very likely be a reduction in the dispensing fee. IRMA will provide that information to our pharmacy members as soon as it becomes available. This is the second significant cut to Medicaid pharmacy in a relatively short period of time.
HB 317 (Speaker Michael Madigan (D-Chicago)/Sen. Heather Steans (D-Chicago) and HB 318 (Speaker Madigan/Sen. Steans) contained the appropriations and implementation language, respectively. They passed the Senate 32-26 and the House 72-45 with bipartisan majorities. In both chambers, all Republicans supported the FY 15 fix. In the Senate, 12 of 39 Democrats supported the budget fix while in the House 25 of 71 supported the fix. Governor Rauner signed these bills into law shortly after passage.
With passage of these bills, the FY 15 state budget is made whole and the discussions will begin in earnest on the FY 16 budget. This budget contains significant shortfalls that will require steep cuts, as outlined by Governor Rauner in his budget address in February, significant new revenue, or a combination of both. To quote the song-writer Jerry Reed, “we’ve got a long way to go and a short time to get there” with thirty official session days left before the target adjournment of May 31st. Of course, they can always go into overtime as the state’s fiscal year does not end until midnight on June 30th. Either way, things are going to get very interesting in the days to come. Hope can be found in the fact that by all appearances, Governor Rauner and his senior staff have forged a working relationship with the four leaders and their staffs.
As noted in previous editions of TWIS, House Amendment #1 to HB 1 (Rep. Lou Lang, D- Chicago) attempts to comprehensively address some of the underlying factors of the heroin epidemic present particularly, but not exclusively, in the greater metro Chicagoland region. This week, HB 1 was reported out of the Substance Abuse Special Committee with the understanding from the sponsor that it was still a work in progress, he would be working with all interested parties, and would be amending HB 1 as discussions unfold.
While there are many provisions of concern to pharmacy, one in particular is a mandated pharmacy-level take-back program. While the state could mandate such a program, pharmacies must operate under the rules recently adopted by the United States Drug Enforcement Agency (DEA). As IRMA has demonstrated, it is a practical impossibility for pharmacy to serve as a take-back location and abide by the DEA’s rules. IRMA met with the sponsor regarding this documented problems. Additionally, as part of a broader coalition addressing many of the other concerns, IRMA met with the sponsor Thursday afternoon where important progress was made on a number of the many outstanding issues. Given the complexity of the bill, there is still a long way to go. IRMA would like to thank Rep. Lang, the lead sponsor, for the constructive manner in which he had conducted these discussions to date as well as co-sponsor Representative John Anthony (R-Morris) and Representative Michael McAuliffe (R-Chicago).
For a few years, pharmaceutical manufacturers have sought to create artificial barriers to the substitution of interchangeable biosimilar drugs at the state level. They are attempting to do this in advance of action by the Food and Drug Administration (FDA) so that when the FDA ultimately approves an interchangeable biosimilar drug, unless the FDA preempts state law, which they are unlikely to do, additional barriers will exist making it harder to interchange and, thereby, forcing patients to continue to use the more expensive biosimilars.
This week, HB 3519 (Rep. David Harris, R- Mount Prospect) was reported out of the House Healthcare Licenses Committee but only after promising the committee he would return with an amendment attempting to address the concerns of pharmacy prior to any final consideration on the floor.
Throughout this deliberation over the years, the proponents’ sponsor, Senator Tony Munoz (D- Chicago) has taken a deliberate, consistent approach insisting that all sides be heard and trying to forge a compromise. In an apparent attempt to force quicker action, the proponents turned their attention to the House. Sen. Munoz has indicated no legislation will pass the Senate absent agreement by the stakeholders. IRMA would like to thank Sen. Munoz for his balanced approach. IRMA has offered yet another potential compromise to the proponents via Senator Munoz and Representative Harris.
An initiative by the City of Chicago to allow certain low-risk food establishments to conduct their own health inspections passed out of the Senate Committee on Public Health unanimously. SB 1800 (Sen. Heather Steans, D-Chicago), seeks to solidify the city’s current pilot self-inspection program that a number of IRMA members have participated in for the last couple of years. The pilot program has been a success and has proven that self-inspections do not present a greater risk of harm to consumers but that they help both government and business operate more efficiently while ensuring a safe food supply. This bill is part of a larger effort to ensure that health inspectors are spending their time with high-risk food establishments where food is being prepared and stored in temperature-controlled conditions, and less time in locations that present less risk of food-borne illness. Low-risk food establishments will be able to self-inspect every 2 years, and those inspections will be randomly audited.
IRMA would like to thank Sen. Steans and co-sponsors Sen. John Mulroe, Sen. Iris Martinez and Sen. Don Harmon for supporting this legislation which adequately protects consumers while concentrating the efforts of inspectors on high-risk establishments.
LIQUOR “OF VALUE” PROVISIONS
HB 4018 (Rep. Frank Mautino, D-Spring Valley) passed out of the House Executive Committee unanimously this week. The bill seeks to clarify that alcoholic liquor can be packaged in combination with non-alcoholic products without violating the three-tier system. In addition, it makes clear that manufacturers and distributors can furnish non-alcoholic merchandise to retailers for free when they are related to non-alcoholic products. The Illinois Liquor Control Commission had previously taken the position that furnishing such items as coolers to promote non-alcoholic products violated the ‘of value’ prohibition in the Act.
IRMA would like to thank Rep. Mautino and co-sponsor Rep. Lou Lang for supporting this piece of common sense legislation which allows for arms-length transactions within the three-tier system regarding non-alcoholic products and furnishings.
This week, SB 1847 (Sen. Daniel Biss, D-Skokie) passed out of the Senate Human Services Committee on a party-line vote. The bill would increase the number of people eligible to receive SNAP by increasing the income limit from the current 133% of FPL to 165% FPL. This change is projected to allow $60 million additional dollars to flow into the program from the federal government. While IRMA is generally supportive of increased access to food, we have a much larger and more pressing concern about how SNAP funds are distributed in Illinois today. That concern, if not address, will be exacerbated by this proposed expansion if not addressed at the same time.
In 2013, under the previous administration, the decision was made to change SNAP distribution from the first 23 days of the month to the first 10 days of the month. After much discussion with the Department, the Governor’s office, and representatives of the advocacy community, IRMA produced documentation regarding the negative impact the distribution had on retailers, employee hours, job loss, and access to fresh produce, meat and dairy for consumers. The Department offered to add 3 temporary distribution dates beyond the 10th of the month. The parties agreed that they would accept those dates with the understanding that they would come together in 2015 to discuss a permanent solution to how SNAP funds would be distributed in the future. Although we are still working to achieve that solution, this bill was introduced which would add more people to the SNAP program, further exacerbating the current problem of how funds are distributed.
We are hopeful that an agreement on SNAP distribution can be reached soon, and are grateful that Sen. Biss has offered to help. However, until a permanent solution is implemented, we remain opposed to this bill which adds more people to a problematic distribution system that needs to be fixed.
HB 3554 (Rep. Will Guzzardi, D-Chicago) passed out of the Labor and Commerce Committee on a party line vote Wednesday. The legislation mandates all employers, including school districts and local governments, negotiate any changes to their schedule as requested by the employee. Employers consider the needs of their business and employees when developing schedules. A variety of data points that are considered include but are not limited to, employee preferences and availability; productivity of the location; seasonal fluctuations; peak guest hours; and product delivery and stocking. Despite employer’s best efforts to predict scheduling needs in each location, the need for employers in any given location is subject to external factors that may change frequently, unpredictably, and for reasons out of the control of the employer. Circumstances such as last minute employee requests for time-off; weather; peak hours; disrupted deliveries; sales fluctuations; sales and special events all impact an employer’s ability to develop and adhere to schedules.
Employers need flexibility to respond efficiently to the rapidly changing environment and balance the needs of consumers, employees, and the work location. Prescriptive constraints on developing schedules reduce the ability of the employer to respond to the changing needs of the employer and employee. Every industry and employer has a unique process and every employee has unique needs. A “one size fits all” statute fails to recognize the unique needs of both businesses and their employees as well as negative impact that they will impose on employee opportunities.
Rep. Guzzardi has committed to work on an amendment to address the concerns of the opponents of the legislation before bringing it back to the Committee for further discussions. We look forward to these continued discussions.
When the Assembly returns on April 14th, we can expect Illinois energy policy to be one of the primary issues under debate. There are competing proposals from various entities including SB 1485, an initiative of the various environmental groups, SB 1585, an initiative of Exelon, and SB 1879 an initiative of Commonwealth Edison. All deal in some way with the renewable portfolio standard and energy efficiency. Others include cap-and-trade, demand-response, microgrids, kilowatt-based rates for retail customers (as opposed to the current demand-based rates), etc. One of the core issues of these discussions will be Exelon’s stated need to preserve their nuclear fleet currently operating in Illinois. Without these cornerstone reactors, Illinois energy users face significantly higher prices and reliability issues. IRMA will engage in these discussions.
SCHEDULE & TIDBIT
The Illinois General Assembly is now on a two-week break and is scheduled to return on Tuesday, April 14th.
As a matter of interest, and to give readers an idea of the volume of legislation dealt with to-date, TWIS offers these stats:
House bills introduced: 4,198
House amendments filed: 456
House bill passed committee: 515
Senate bills introduced: 2,124
Senate amendments filed: 291
Senate bills passed committee: 1,169 (including 833 shells. Shell, or vehicle, bills are pieces of legislation that contain on real content. They can become vehicles for amendments later in the process.)
Bills signed into law – 2 (the FYI 2015 budget fix)
Obviously, as session continues, these numbers will change as many more amendments will be offered and legislation progresses through the process.
BUSINESS DAY 2015
On May 6th, Governor Bruce Rauner will address the opening luncheon of Illinois Business Day 2014 – an annual joint program of IRMA and the Illinois Manufacturers’ Association. It is the largest gathering of Illinois employers comes as the process enters the final scheduled month when many decisions are being made. Plan now to attend on Wednesday, May 6th. There are still openings available but they are going fast. You can register here Business Day Registration.