Legislature(2021 - 2022)BELTZ 105 (TSBldg)
02/14/2022 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s) | |
| SB41 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 41 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 41-HEALTH INSURANCE INFO.; INCENTIVE PROGRAM
2:12:23 PM
CHAIR COSTELLO announced the consideration of SENATE BILL NO. 41
"An Act relating to health care insurers; relating to
availability of payment information; relating to an incentive
program for electing to receive health care services for less
than the average price paid; relating to filing and reporting
requirements; relating to municipal regulation of disclosure of
health care services and price information; and providing for an
effective date."
CHAIR COSTELLO noted that the bill was heard last year and today
there was a committee substitute for the committee to consider.
2:12:42 PM
SENATOR REVAK moved to adopt the work draft committee substitute
(CS) for SB 41, work order 32-LS0247\I, as the working document.
CHAIR COSTELLO objected for an explanation of the changes.
2:13:09 PM
SENATOR SHELLEY HUGHES, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 41 thanked the committee for hearing the
bill a second time. She stated that this bill provides an
opportunity to help with the high cost of healthcare in the
state.
2:13:56 PM
BUDDY WHIT, Staff, Senator Shelley Hughes, Alaska State
Legislature, Juneau, Alaska, read the changes between version A
and version I for SB 41. He explained that the CS makes
structural changes to the bill, but it does not change the
result.
[Original punctuation provided.]
Page 1, Line 3
Replaces "the average price paid" in the title with
"the median of the contract rates recognized by an
insurer." This change is made throughout Version I.
Sec. 2 Page 1
Version I removes entirely the previous section 2,
which required health care providers to provide to any
uninsured patients estimates of total charges that
include any financial assistance available from the
provider and direct the patient to any available
websites that provide information about standard
charges for that type of health care service. The
following sections are renumbered accordingly.
2:15:17 PM
Sec. 3 AS 21.36.100 Page 3, Lines 2-18
Adds to statute an exception for the incentive program
described in section 4, AS 21.96.220, to allow for
rebates of premiums payable for health insurance
coverage.
Sec. 4 AS 21.96 Page 3, Lines 19-31, Page 4, Lines
1-31, Page 5, Lines 1-31, Page 6, Lines 1-15
Version I inserts the title "Article 2. Health Care
Insurance Incentive Program," before adding new
sections.
In section 21.96.210, the term "a health care insurer"
is updated to specify "a health care insurer that
offers a health care insurance policy in the group or
individual market." This change is made throughout
Version I. In Version A, this section requires health
care insurers to provide an interactive online
mechanism for covered individuals to request
information on payments made by the insurer to network
health care providers for services and compare prices
among network providers. In Version I, this section
requires that health care insurers must provide
comprehensive comparison guidance by telephone and
online, and further, must allow a covered individual
to compare the amount of cost sharing that he would be
responsible for paying. The health care insurer must
comply with the federal code regarding the maintenance
of such a price comparison tool.
2:16:48 PM
In section 21.96.220(a), the language is updated to
specify "a monetary incentive" instead of "an
incentive." Version I removes the list of specific
health care service categories which a health care
insurer must include in the incentive program.
The language in section 21.96.220(b) from Version A is
separated into three subsections in Version I: (b),
(c), and (d). Additional language is inserted to
specify that a health care insurer is not required to
provide an incentive payment if the cost savings to
the insurer is $200 or fewer. The previously lettered
subsection (c), which stated that the average price
must be based on a period that does not exceed one
year is removed in Version I.
2:17:44 PM
In subsection (e), Version I states that an incentive
payment is not a violation of AS 21.36.100, which is
also specified in section 3 of the bill.
Sec. 21.96.260 is updated from requiring that health
care insurers file annual reports regarding their
incentive programs with the director of the Division
of Insurance, to requiring that they provide that
information to the director if requested. Subsection
(b) is updated to include this information in the
director's annual report, submitted to the House and
Senate Labor & Commerce Committees, rather than in a
separate report.
Sec. 21.96.280 is a new section in Version I which
specifies that sections 21.96.210 - 21.96.300 apply to
a health care insurance policy or contract but do not
apply to excepted exempted benefits, except for those
benefits provided under dental and vision insurance
policies.
Section 21.96.300 replaces the definition of "health
care insurance plan" with definitions for "health care
insurance" and "policy" to conform to technical
language fixes made throughout Version I.
2:19:05 PM
Sec. 8 Page 7, Lines 13-18
Version I specifies that the director of the Division
of Insurance may adopt regulations necessary to
implement this Act, rather than broadly the Department
of Commerce Community and Economic Development.
Sec. 10 Page 7, Line 20
Updates the effective date from January 1, 2022 to
January 1, 2023, for all sections but 7 and 8, which
take effect immediately.
2:19:35 PM
CHAIR COSTELLO asked what Sections 7 and 8, which take effect
immediately, are about.
MR. Whit explained that Section 7 is uncodified law about the
report that was mentioned and Section 8 is transition language
for the regulations for this Act, which fall under the director
of the Division of Insurance.
CHAIR COSTELLO observed that this allows the division to start
the regulation process before the law becomes effective.
MR. WHIT replied that is correct.
SENATOR HUGHES offered her belief that the changes in this
committee substitute enhance what the bill seeks to do. For
example, version I says a health care insurer is not required to
provide an incentive payment if the cost savings to the insurer
is less than $200. Also, the insurance companies only have to
file the reports at the request of the director, not
automatically. The CS also specifies that the incentive to get
people to shop will be monetary, which is in line with the goal
to reintroduce free market principles into the healthcare
industry. Somebody who shops for a less expensive provider will
share in the savings. She noted that the online tool, which did
not work when the bill was heard last year, will be required at
the federal level and that will make this bill work. The target
date for those online tools has been extended to July 1, 2022.
2:22:02 PM
CHAIR COSTELLO removed her objection. Finding no further
objection, version I was adopted.
SENATOR GRAY-JACKSON asked for a brief explanation of what the
bill does.
2:22:57 PM
At ease.
2:23:45 PM
CHAIR COSTELLO reconvened the meeting and asked the sponsor to
refresh the members' recall of what SB 41 does.
SENATOR HUGHES explained that this is a pro-consumer bill that
seeks to reduce health care costs for Alaskans. She cited the
example of somebody who gets knee surgery. The individual would
be able to use an online tool through their insurance company to
find the providers for the procedure and the cost. If the cost
ranges from $5,000 to $15,000, the average would be $10,000. If
the individual selects a provider that charges $7,000, the
individual, the employer, and the insurance company each would
realize a $1,000 savings. She opined that this monetary
incentive would make individuals shop. This is more user
friendly for the consumer than previous legislation that also
intended to reduce health care costs.
She relayed that several states have passed similar legislation
and it has proved to be successful. She posited that over time
the providers who charge the most may nudge their prices down.
She said more expensive care does not equate to better care and
her belief is that someone who shops is more likely to listen to
their provider and take better care of their health.
CHAIR COSTELLO observed that the language on page 4, line 17
talks about median rates and paragraph (21) on page 4 says the
consumer receives at least 50 percent of the difference between
what they selected and the median rate. She asked the sponsor to
comment.
SENATOR HUGHES offered her understanding that if an employer is
not providing the insurance, the consumer would split the
savings 50:50 with the insurance company.
CHAIR COSTELLO welcomed Lori Wing-Heier.
2:28:34 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), Anchorage,
Alaska, introduced herself.
CHAIR COSTELLO asked how SB 41 will affect the health care of
Alaskan consumers.
MS. WING-HEIER explained that the bill tells consumers that they
will benefit from the savings if they find an out of network
provider that is charging less for a given procedure. On an
employer sponsored plan the savings would be split equally
between the employer, the insurance company, and the consumer.
Each would receive one-third of the savings. The individual
market does not have employer-sponsored plans so the split would
be 50:50. The bill helps encourage Alaskans to look at the cost
of health care, how much their insurance company would pay, and
to consider selecting the best price. The incentive is that the
consumer will recognize some of the savings from their
selection.
2:29:56 PM
SENATOR MICCICHE said he likes the concept, but wonders whether
the reimbursement could possibly be greater than the out-of-
pocket payment. He provided a hypothetical example of a heart
surgery with costs much higher and much lower than the median
cost of $150,000. The insured's selection saved $50,000 and
their out-of-pocket payment was $6,000. He asked if the consumer
could profit from that savings or if there would be a cap.
MS. WING-HEIER said the bill does not cap what the insured can
recover. She explained that most plans have an annual out-of-
pocket maximum so the consumer's portion of the savings could
exceed what they spent out of pocket.
SENATOR MICCICHE asked if this could also apply to elective
surgery such as braces.
MS. WING-HEIER answered yes.
2:31:55 PM
SENATOR GRAY-JACKSON provided a hypothetical example of a
surgery that ranged in cost from $75 to $100. She asked if the
$25 difference was the amount that would be split.
MS. WING-HEIER answered yes; the insured is not required to go
to the out-of-network doctor that charges less for the
procedure, but it is an option for the insured. A consumer that
selects that option may benefit from the savings.
She referenced the Chair's earlier observation and explained
that the division asked the sponsor to use the median rate in
the bill because that is the measure required in the federal No
Surprise Act.
CHAIR COSTELLO referenced Senator Gray-Jackson's example and
offered her understanding that the bill does not apply to any
cost that is less than $200.
MS. WING-HEIER replied that is correct.
SENATOR MICCICHE noted the bill packet contains information
about legislation enacted in Florida that authorizes insurers to
participate in the individual and small group markets to develop
shared savings programs for enrollees. He asked if any other
states have an incentive similar to SB 41 and if the savings can
be above the out-of-pocket costs.
MS. WING-HEIER recalled that New Hampshire and Maine have a
similar statute, but she did not know if those allow realized
savings that are above the out-of-pocket amount.
2:34:56 PM
CHAIR COSTELLO asked if the consumer has to talk to all the
doctors involved in a given procedure to determine which option
is cheaper.
MS. WING-HEIER answered no; the incentive is based on what the
surgeon charges and it would be a separate incentive program if
the insured wanted to price compare anesthesiologists as well.
She noted that a consumer looking for an overall price generally
will know the surgery center and the anesthesiologist the doctor
uses.
CHAIR COSTELLO asked what happens if the consumer is not able to
get the information from the provider because they're told "it
depends." She relayed her experience
2:37:11 PM
MS. WING-HEIER said federal law requires providers to give a
good faith estimate, but acknowledged the possibility of
unforeseen circumstances that could increase the charge. It
happens but it is not an everyday occurrence.
CHAIR COSTELLO asked how the division contemplates educating
Alaskans about the bill.
MS. WING-HEIER replied, should the bill be signed into law, the
division would work with the insurance companies to ensure they
tell their policy holders that this exists. The division would
also post the information on its website and through social
media.
CHAIR COSTELLO asked what happens if the insured finds an in-
network provider that is cheaper.
MS. WING-HEIER replied that should not affect the incentive.
Theoretically, she said there should not be much difference
between what providers in the same network are paid.
2:39:47 PM
SENATOR REVAK asked if the insured could realize savings in
excess of the deductible.
MS. WING-HEIER replied it is possible.
SENATOR REVAK said he appreciates the idea of shared savings. He
relayed that his office looked at shared savings for Medicaid
and found that other states imposed a timeframe because people
were trying to game the system to get cash back. He suggested
that was a consideration.
CHAIR COSTELLO observed that in some instances the deductible
could be as low as $250. She asked Ms. Wing-Heier to comment.
MS. WING-HEIER said that for a large more expensive procedure,
the differential between the network rate and the less expensive
out-of-network rate could exceed the deductible. It's less
likely if the procedure is less costly.
SENATOR REVAK restated that he was not opposed to the idea, but
when he looked at it in the Medicaid context he found the
feedback from other states about unintended consequences
interesting. He didn't know if a fix was necessary, but it was
something to think about, he said.
MS. WING-HEIER responded that the bill is meant to benefit
consumers and if the division saw somebody trying to game the
system they would use the statutory authority available to stop
it as quickly as possible.
2:43:57 PM
CHAIR COSTELLO asked whether the bill provides the authority for
the division to write regulations to address Senator Revak's
concerns.
MS. WING-HEIER answered yes; the bill authorizes the division to
adopt regulations. The division would work with the public, the
providers, and the payers to identify gamers and take action
accordingly.
CHAIR COSTELLO asked whether travel to an urban center for
surgery would be factored in.
MS. WING-HEIER answered that traveling to a place where there
are more facilities and more competitive prices would have to be
a piece. The procedure itself would fall under the bill, but she
did not believe there would be incentive programs to pay for
travel.
2:45:26 PM
At ease
2:47:47 PM
CHAIR COSTELLO reconvened the meeting and asked Ms. Wing-Heier
if she would like to comment.
2:48:00 PM
MS. WING-HEIER stated that she would return when the bill is
heard next with different scenarios for how the bill would
affect out-of-pocket and deductible costs and if there would be
a way to impose a cap so no one is able to profit or game the
system.
CHAIR COSTELLO suggested the members send any questions to her
office for distribution to the sponsor and the division
director. Those responses would also be reviewed at the same
time.
CHAIR COSTELLO held SB 41 in committee for future consideration.