Legislature(2019 - 2020)CAPITOL 106

05/02/2019 03:00 PM HEALTH & SOCIAL SERVICES

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Audio Topic
03:06:50 PM Start
03:07:26 PM HB92
04:55:16 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
      HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                     
                          May 2, 2019                                                                                           
                           3:06 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Ivy Spohnholz, Co-Chair                                                                                          
Representative Tiffany Zulkosky, Co-Chair                                                                                       
Representative Matt Claman                                                                                                      
Representative Harriet Drummond                                                                                                 
Representative Geran Tarr                                                                                                       
Representative Sharon Jackson                                                                                                   
MEMBERS ABSENT                                                                                                                
Representative Lance Pruitt                                                                                                     
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 92                                                                                                               
"An Act  exempting direct health care  agreements from regulation                                                               
as  insurance; establishing  a direct  care  payment program  for                                                               
medical  assistance recipients;  and providing  for an  effective                                                               
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 92                                                                                                                   
SHORT TITLE: DIRECT HEALTH: NOT INSUR; ADD TO MEDICAID                                                                          
SPONSOR(s): REPRESENTATIVE(s) JOHNSTON                                                                                          
03/13/19       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/13/19       (H)       HSS, FIN                                                                                               
04/04/19       (H)       HSS AT 3:00 PM CAPITOL 106                                                                             
04/04/19       (H)       Heard & Held                                                                                           
04/04/19       (H)       MINUTE(HSS)                                                                                            
05/02/19       (H)       HSS AT 3:00 PM CAPITOL 106                                                                             
WITNESS REGISTER                                                                                                              
ERIN SHINE, Staff                                                                                                               
Representative Jennifer Johnston                                                                                                
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   During the hearing  of HB 92, on  behalf of                                                           
the bill  sponsor, Representative Johnston, provided  a sectional                                                               
analysis of Version E, the proposed committee substitute.                                                                       
DONNA STEWARD, Deputy Commissioner                                                                                              
Office of the Commissioner                                                                                                      
Department of Health and Social Services (DHSS)                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   During the  hearing of  HB 92,  answered a                                                             
question related to the bill.                                                                                                   
CYNTHIA FRANKLIN, Assistant Attorney General                                                                                    
Special Litigation and Consumer Protection                                                                                      
Civil Division (Anchorage)                                                                                                      
Department of Law (DOL)                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   During  the  hearing  of HB  92,  answered                                                             
questions related to the bill.                                                                                                  
REPRESENTATIVE JENNIFER JOHNSTON                                                                                                
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Speaking as the sponsor of  HB 92, answered                                                           
a question during the hearing of the bill.                                                                                      
JAY KEESE, Executive Director                                                                                                   
Direct Primary Care Coalition                                                                                                   
Washington, DC                                                                                                                  
POSITION  STATEMENT:   During the  hearing of  HB 92,  provided a                                                             
PowerPoint presentation titled "Direct Primary Care in 2019."                                                                   
PHILIP ESKEW, DO, JD, MBA                                                                                                       
Family Medicine Physician & Attorney                                                                                            
DPC Frontier                                                                                                                    
No address provided                                                                                                             
POSITION  STATEMENT:   During  the  hearing  of HB  92,  provided                                                           
testimony and answered questions.                                                                                               
ERIKA BLISS, MD                                                                                                                 
Equinox Primary Care                                                                                                            
Seattle, Washington                                                                                                             
POSITION  STATEMENT:   During  the  hearing  of HB  92,  provided                                                             
testimony and answered questions.                                                                                             
MANDY WEEKS GREEN, Senior Health Policy Analyst                                                                                 
Office of the Insurance Commissioner (OIC)                                                                                      
Washington State                                                                                                                
Olympia, Washington                                                                                                             
POSITION  STATEMENT:   During  the  hearing  of HB  92,  provided                                                           
testimony and answered questions.                                                                                               
ACTION NARRATIVE                                                                                                              
3:06:50 PM                                                                                                                  
CO-CHAIR  IVY  SPOHNHOLZ  called  the  House  Health  and  Social                                                             
Services  Standing  Committee meeting  to  order  at [3:06]  p.m.                                                               
Representatives  Jackson, Claman,  Tarr, Zulkosky,  and Spohnholz                                                               
were  present at  the  call to  order.   Representative  Drummond                                                               
arrived as the meeting was in progress.                                                                                         
        HB 92-DIRECT HEALTH: NOT INSUR; ADD TO MEDICAID                                                                     
3:07:26 PM                                                                                                                    
CO-CHAIR SPOHNHOLZ announced the only  order of business would be                                                               
HOUSE  BILL  NO.  92,  "An   Act  exempting  direct  health  care                                                               
agreements from  regulation as  insurance; establishing  a direct                                                               
care  payment  program  for medical  assistance  recipients;  and                                                               
providing for an effective date."                                                                                               
3:07:49 PM                                                                                                                    
CO-CHAIR  ZULKOSKY   moved  to   adopt  the   proposed  committee                                                               
substitute (CS)  for HB 92,  Version 31-LS0243\E,  Marx, 4/26/19,                                                               
as the  working document.   There being  no objection,  Version E                                                               
was before the committee.                                                                                                       
3:08:19 PM                                                                                                                    
ERIN  SHINE,  Staff,  Representative  Jennifer  Johnston,  Alaska                                                               
State   Legislature,  on   behalf  of   Representative  Johnston,                                                               
sponsor, stated Version E maintains  the underlying intent of the                                                               
original version  of HB 92,  which is to exempt  direct practices                                                               
from the definition  of insurance.  She said Version  E makes two                                                               
major changes from  the original bill (Version U):   1) it limits                                                               
to direct  primary care; 2)  it removes  Sections 2 through  7 of                                                               
Version U  related to mandatory  Medicare/Medicaid participation.                                                               
Further, Version  E adds  a new section  in response  to concerns                                                               
about transparency and consumer protection.                                                                                     
MS. SHINE  began the sectional  analysis of Version E  by drawing                                                               
attention to the updated title on page 1, lines 1-2, which read:                                                                
     "An  Act  relating  to insurance;  relating  to  direct                                                                    
     primary care  agreements for health care;  and relating                                                                    
     to  the  Alaska  Unfair Trade  Practices  and  Consumer                                                                    
     Protection Act."                                                                                                           
MS.  SHINE explained  the  updated title  identifies  that it  is                                                               
direct primary  care; removes the medical  assistance recipients,                                                               
which  is  the  Medicare/Medicaid  language;  and  adds  that  it                                                               
relates  to   Alaska's  Unfair   Trade  Practices   and  Consumer                                                               
Protection Act (UTPA).                                                                                                          
MS. SHINE  noted Section 1  of Version E  is a new  whole section                                                               
while in Version  U it was a subsection.   Section 1 would create                                                               
a new title, Sec. 21.03.031,  for direct primary care agreements.                                                               
This  would  exempt  direct  primary  care  agreements  from  the                                                               
application  of Title  21, relating  to insurance,  if a  written                                                               
health  care   agreement  contains  the   following  information:                                                               
describes the services  provided in exchange for  a periodic fee;                                                               
allows  either party  to terminate  the agreement  as long  as 60                                                               
days' notice is  given; clearly states that the  agreement is not                                                               
health insurance  in at  least 12-point  font in  plain language;                                                               
and   prohibits   the    provider   from   receiving   additional                                                               
compensation for the services rendered.                                                                                         
3:10:56 PM                                                                                                                    
MS. SHINE  detailed the changes made  in Section 1 of  Version E.                                                               
She brought attention  to subsection (a), paragraph  (5), page 2,                                                               
lines 7-8,  which state, "is written  in a font not  smaller than                                                               
12  points and  in  plain  language that  an  individual with  no                                                               
medical training can understand".   She said this language is new                                                               
and was added  in response to concerns about  transparency and to                                                               
ensure consumer understanding of the  direct care agreement.  She                                                               
explained  that  subsection (b),  page  2,  lines 12-13,  is  new                                                               
language that  was added to include  consumer protection statutes                                                               
and regulations  under AS 45.45.915.   She noted  subsection (c),                                                               
page 2,  lines 14-25, is new  language that was added  to require                                                               
direct primary  care providers to  submit certain  information no                                                               
later  than  September  1  of  each  year  to  the  [Division  of                                                               
Insurance,   Department  of   Commerce,   Community  &   Economic                                                               
Development].  This information  includes the number of providers                                                               
in a practice, the [practice's]  capacity for direct primary care                                                               
patients,  the  number  of  direct   primary  care  patients  and                                                               
periodic  fees paid  for  the preceding  calendar  year, and  any                                                               
other information  requested by  the division.   She  stated that                                                               
subsection  (d), beginning  on page  2, line  26, defines  health                                                               
care,  health  care  practices,  and  health  care  provider  for                                                               
purposes of [Section 1].  Paragraph  (2) of subsection (d) is new                                                               
language that  was added to  provide a definition of  health care                                                               
MS. SHINE pointed  out that all the language on  page 3 from line                                                               
5 onward  is new to  this bill.  She  explained Section 2  is for                                                               
direct primary  care agreements for health  care.  It adds  a new                                                               
section  restricting   a  direct   primary  care   provider  from                                                               
terminating  agreements  solely  based  upon  health  status,  or                                                               
declining  to  accept  a  new patient  unless  the  practice  has                                                               
received  its  maximum capacity  of  patients,  or is  unable  to                                                               
provide the  level of care  required by  the patient.   This also                                                               
provides definitions and citations  for the definitions of direct                                                               
primary  care  agreement and  health  care  provider.   She  said                                                               
Section 3, beginning  on line 21, adds a new  violation under the                                                               
Unfair  Trade Practices  and Consumer  Protection Act  (UTPA) for                                                               
violating AS 45.45.915.                                                                                                         
3:13:47 PM                                                                                                                    
REPRESENTATIVE TARR  asked why payments  related to  Medicare and                                                               
Medicaid were removed from the bill.                                                                                            
MS.  SHINE  replied  the  sponsor sought  to  simplify  the  bill                                                               
because  it  is  unclear  how  the state  would  be  affected  by                                                               
Medicare and  Medicaid patients participating in  [direct primary                                                               
care] agreements.  She noted  that after [Version E] was drafted,                                                               
the  Centers  for Medicare  and  Medicaid  Services (CMS)  issued                                                               
guidance,  which the  Department  of Health  and Social  Services                                                               
(DHSS) would be able to speak  to.  Furthermore, the inclusion of                                                               
Medicare  and Medicaid  recipients in  primary care  agreements -                                                               
that  was part  of previous  versions of  the bill  - would  have                                                               
established Alaska as the first state  to do so.  Ms. Shine urged                                                               
that there be more discussion on this issue.                                                                                    
REPRESENTATIVE TARR  asked whether Ms.  Shine is saying  that the                                                               
billing codes  for this service  don't yet exist in  Medicaid and                                                               
so  it  would  be  unclear  whether  a  Medicaid  enrollee  could                                                               
participate, and have it covered by Medicaid.                                                                                   
MS. SHINE  responded it is  unclear how the state  would interact                                                               
with CMS  on how to pay  for services.  She  posited payments may                                                               
be structured  in a  manner similar to  compensation by  a health                                                               
management  organization (HMO)  or another  model.   The previous                                                               
version  of the  bill, which  included this  provision, contained                                                               
"cumbersome" conditional language.                                                                                              
3:16:13 PM                                                                                                                    
DONNA STEWARD,  Deputy Commissioner, Office of  the Commissioner,                                                               
Department  of  Health  and  Social  Services  (DHSS),  addressed                                                               
Representative Tarr's  questions about what potentially  might be                                                               
involved.  She spoke as follows:                                                                                                
     The situation  with CMS is  what they have  offered, an                                                                    
     opportunity  for the  Medicare program  to have  models                                                                    
     that move  forward, that look  at direct  primary care.                                                                    
     They've not  necessarily extended the same  modeling to                                                                    
     the Medicaid  program but  all that  means is  in order                                                                    
     for us to move forward, we  would need to engage with a                                                                    
     demonstration  waiver, so  an 1115  waiver, sketch  out                                                                    
     what  it is  that  we  are hoping  will,  you know,  be                                                                    
     accomplished  through moving  through that  process and                                                                    
     then   beginning   that   negotiation   with   CMS   to                                                                    
     potentially adopt both  a new provider type  and then a                                                                    
     new way  to bill for  that service.   Right now  in fee                                                                    
     for service  Medicaid programs,  which Alaska,  that is                                                                    
     the  design for  our  program, we  are  not allowed  to                                                                    
     prepay  for a  service, and  so at  this point  that is                                                                    
     kind of how the direct  primary care is used because we                                                                    
     would  be  paying a  monthly  fee  for a  service  that                                                                    
     potentially  the individual  may not  need that  month,                                                                    
     and so it  just needs to be a  negotiation through that                                                                    
     waiver  process in  order to  develop the  new provider                                                                    
     type, how  the structure would  work, and then  get the                                                                    
     payment mechanism and model in place.                                                                                      
3:17:52 PM                                                                                                                    
CO-CHAIR ZULKOSKY  recalled that  the bill's language  related to                                                               
Medicaid  percentage is  a problem  because of  the way  Alaska's                                                               
Medicaid payments  are structured; for example,  Washington has a                                                               
managed care payment plan and Alaska is fee for service.                                                                        
MS. SHINE  agreed Alaska's [plan]  is currently fee  for service,                                                               
although there are Medicaid demonstration  projects that might be                                                               
coming online  that utilize managed  care forms of payment.   She                                                               
offered  her belief  that there  are  other states  that do  have                                                               
participation  from  Medicaid in  direct  primary  care, but  she                                                               
doesn't believe it is available to Alaska currently.                                                                            
3:18:56 PM                                                                                                                    
REPRESENTATIVE CLAMAN turned attention to  Section 3 of Version E                                                               
related  to the  Unfair Trade  Practices and  Consumer Protection                                                               
Act (UTPA).   He asked what portion of the  services by providers                                                               
would be subject to the UTPA.                                                                                                   
MS. SHINE  offered her  belief it  would have  to be  governed by                                                               
what's  in the  contract between  the provider  and the  patient,                                                               
such  as  a  breach  of  contract  related  to  reimbursement  or                                                               
REPRESENTATIVE CLAMAN posed a scenario  in which the patient of a                                                               
primary  care   provider  alleges  that  the   services  provided                                                               
constitute  malpractice.    He inquired  whether  this  provision                                                               
would  mean that  a malpractice  claim on  the services  would be                                                               
subject to the treble damage provisions of the UTPA.                                                                            
MS. SHINE offered her understanding  that they would be different                                                               
and  a claim  for malpractice  would be  in a  different section.                                                               
This  is  what  governs  the  contract.    She  deferred  to  the                                                               
Department of Law  (DOL) to identify what would  be covered under                                                               
this new  section that would be  added to the UTPA.   She offered                                                               
her belief  that anything that  happens currently  under practice                                                               
for medical malpractice  would still be covered in  the same way.                                                               
This is  adding a  section specifically  to these  direct primary                                                               
care agreements,  so that if  there is a consumer  complaint that                                                               
there is something  within the Consumer Protection  Unit that has                                                               
the authority  to be able  to address them.   Ms. Shine  said she                                                               
would get back to the committee with clarification.                                                                             
3:21:28 PM                                                                                                                    
REPRESENTATIVE  CLAMAN posed  a  scenario in  which  there is  an                                                               
argument that  [the provider] was  supposed to provide  a certain                                                               
amount of services as a function  of the contract and the failure                                                               
to provide those services.   For example, prescription medication                                                               
was  part  of the  contract  but  [the provider]  didn't  provide                                                               
consumer medication that was covered  by it.  He surmised there'd                                                               
be  a claim  under the  "deceptive trade  practices act"  for the                                                               
failure to provide the medication,  but that the treatment itself                                                               
wouldn't be covered.                                                                                                            
MS. SHINE offered her belief that that  is how it is set up.  She                                                               
said  she  believes that  if  there  was malpractice  within  the                                                               
process  of providing  the  medication that  is  outside of  what                                                               
would  be  constituted  as  malpractice   it  would  be  under  a                                                               
different section.   She said she will get back  to the committee                                                               
with clarification.                                                                                                             
REPRESENTATIVE  CLAMAN  asked   about  circumstances  related  to                                                               
contracts with primary care clinics  outside of the participating                                                               
groups  [of  direct care  providers].    He asked  whether  those                                                               
providers would be subject to the provisions of the UTPA.                                                                       
MS. SHINE responded  she doesn't believe so because  it would not                                                               
be a direct  primary care practice.  She said  she would get back                                                               
to the committee with clarification.                                                                                            
3:23:45 PM                                                                                                                    
The committee took an at-ease from 3:23 p.m. to 3:28 p.m.                                                                       
3:28:08 PM                                                                                                                    
REPRESENTATIVE CLAMAN drew  attention to Section 3  of Version E,                                                               
which would  add provisions into  the Unfair Trade  Practices and                                                               
Consumer Protection  Act (UTPA).   He  noted he  is aware  of the                                                               
treble  damages provision  of  the UTPA.   In  a  situation of  a                                                               
malpractice allegation  against a  clinic that  has one  of these                                                               
contracts in  place, he  asked whether Section  3 would  open the                                                               
care provided to a treble-damages claim.                                                                                        
3:28:56 PM                                                                                                                    
CYNTHIA FRANKLIN, Assistant  Attorney General, Special Litigation                                                               
and Consumer  Protection, Civil Division  (Anchorage), Department                                                               
of Law  (DOL), answered that  the treble damages section  in UTPA                                                               
belongs to  individual litigants  alone.  Thus,  in an  action by                                                               
the  state under  UTPA,  "the civil  penalty  section trumps  the                                                               
treble damages section."  So,  the interaction would be between a                                                               
consumer's  individual   UTPA  lawsuit  against  the   clinic  or                                                               
provider, and  their medical  malpractice claim.   How  those two                                                               
legal claims  would interact  would be a  question for  a private                                                               
attorney.   However, the UTPA  claim damages would be  limited to                                                               
whatever damages arose from the  violations of the section of the                                                               
direct primary care  provider statutes.  So, if HB  92 is passed,                                                               
the  consumer would  be  limited to  claim  damages for  whatever                                                               
actions by the clinic violated the provision in the bill.                                                                       
3:30:13 PM                                                                                                                    
REPRESENTATIVE  CLAMAN posed  an example  of  a man  who signs  a                                                               
contract with a  clinic to provide services at  a certain monthly                                                               
fee to come as often as the patient  wants.  The man's wife has a                                                               
child with the clinic and  the man believes there was malpractice                                                               
committed  in the  course of  delivering  that child.   He  asked                                                               
whether  that means  the man  has a  malpractice claim  under the                                                               
MS. FRANKLIN responded,  "I don't know how  the malpractice claim                                                               
would  interact  with the  contract,  but  I don't  believe  that                                                               
Section  3 and  the patient's  individual lawsuit  under the  UTP                                                               
would come into play in that scenario."                                                                                         
REPRESENTATIVE CLAMAN  inquired whether  Section 2 and  Section 3                                                               
give  the Division  of  Insurance the  ability  to supervise  and                                                               
regulate as a  governmental matter what the clinic is  doing.  He                                                               
further asked what these two sections of the bill are doing.                                                                    
MS. FRANKLIN replied:                                                                                                           
     It's my  understanding that Section 3  is added because                                                                    
     ...  the  lack  of  characterization of  this  type  of                                                                    
     provider care  as insurance would prevent  the Division                                                                    
     of   Insurance    from   regulating,   and    in   most                                                                    
     circumstances  when  we  have  some  kind  of  consumer                                                                    
     transaction,   and   there's    no   other   regulating                                                                    
     authority, it  falls under  the Unfair  Trade Practices                                                                    
     Act, and is  added as a section here.   So, in terms of                                                                    
     governmental regulation, it  defaults to the Department                                                                    
     of  Law,  the  Attorney General's  office,  to  monitor                                                                    
     consumer  complaints   on  a  business   and  determine                                                                    
     whether  or  not  any  of  the  actions  complained  of                                                                    
     violate any section of the  Unfair Trade Practices Act.                                                                    
     In this case  it would include sections 1 and  2 of the                                                                    
     bill  in front  of  you.   And  so  we,  as AGs,  would                                                                    
     evaluate  whether  the  complaint of  conduct  violated                                                                    
     sections  1 and  2  and then  theoretically, could,  if                                                                    
     there was a  pattern of conduct on  a particular clinic                                                                    
     or provider,  that was  cheating, so  to speak,  or not                                                                    
     playing by those  rules that are set out  in sections 1                                                                    
     and  2,  then theoretically,  we  could  bring a  state                                                                    
     action in  superior court  seeking civil  penalties for                                                                    
     the business  violating those other sections,  and that                                                                    
     would   act   as   ...  the   governmental   regulatory                                                                    
     authority.    But because  it's  placed  in the  Unfair                                                                    
     Trade   Practices  Act,   it   also  gives   individual                                                                    
     patients,  as  consumers  of the  services,  individual                                                                    
     rights of action under the Act.                                                                                            
3:33:32 PM                                                                                                                    
REPRESENTATIVE  JACKSON  stated  she   likes  that  Medicaid  and                                                               
Medicare [patients]  were removed  from the bill  because [direct                                                               
care providers] fulfil the needs of  those who do not qualify for                                                               
Medicaid  and  for whom  "regular"  insurance  is too  expensive.                                                               
Also,  the   bill  provides  entrepreneurial   opportunities  for                                                               
physicians.   She said she  doesn't like the  provision requiring                                                               
that  20 percent  of patients  are qualified  for Medicaid.   She                                                               
said Medicaid  does not  pay before a  service and  asked whether                                                               
Medicaid  is able  to reimburse  a  patient if  [direct care]  is                                                               
preferred  by  the  patient.    Representative  Jackson  recalled                                                               
previous testimony that in Florida,  Medicaid patients do not use                                                               
Medicaid to see [direct care  providers].  She questioned whether                                                               
Medicaid patients could get reimbursed  for services provided [by                                                               
direct care providers].                                                                                                         
3:35:41 PM                                                                                                                    
REPRESENTATIVE  JENNIFER  JOHNSTON,   Alaska  State  Legislature,                                                               
speaking as  the sponsor of HB  92, said Florida has  a different                                                               
program for its Medicaid expansion  group.  Another bill has been                                                               
introduced that  proposes for Alaska  "to have a plan  similar to                                                               
help people as they get off  Medicaid expansion."  However, it is                                                               
a plan that Alaska doesn't have  currently, and it is a plan that                                                               
requires patients  to pay some  amount.   That is why  in Florida                                                               
this does  work with the Medicaid  program, but it does  not work                                                               
in Alaska.                                                                                                                      
REPRESENTATIVE  JACKSON recalled  testimony  from  a speaker  who                                                               
said people [who qualified for  Medicaid] were willing to pay for                                                               
MS.  SHINE  answered  that  each  state  implements  the  program                                                               
differently; [in  Alaska], Medicaid  is not  currently set  up to                                                               
pay fees.  She continued:                                                                                                       
     I think it's not targeted  at one population; these are                                                                    
     direct primary  care agreements.   I think  you'll hear                                                                    
     through  testimony  from  other  states  and  how  it's                                                                    
     worked, that  I think  that there  are people  ... that                                                                    
     have Medicaid,  people that have Medicare,  people that                                                                    
     are uninsured,  people that have employer  sponsored or                                                                    
     exchange  insurance that  are accessing  direct primary                                                                    
     care.  We included that  language to make sure that ...                                                                    
     Medicaid and  Medicare patients were not  excluded from                                                                    
     them.   I think it  is still part of  the conversation,                                                                    
     but it is not in the bill.                                                                                                 
3:38:12 PM                                                                                                                    
CO-CHAIR ZULKOSKY asked Ms. Franklin  to clarify the unfair trade                                                               
practice  protections added  in Section  3 and  whether it  would                                                               
mean that  any claims  resulting out of  a direct  care agreement                                                               
would be limited to damages  from violations of the agreement and                                                               
would not be related to malpractice damages.                                                                                    
MS. FRANKLIN replied that she  thinks an individual patient would                                                               
have both  claims; the [Unfair  Trade Practices Act]  claim would                                                               
be  unrelated  to  the  medical  malpractice  claim  because  the                                                               
medical   malpractice  claim   addresses  the   quality  of   the                                                               
professional  treatment  and  the [Unfair  Trade  Practices  Act]                                                               
claim would  be a claim  that something about the  business setup                                                               
or  the  billing  violated  the  Unfair  Trade  Practice  Act  or                                                               
violated Section 1 or Section 2.                                                                                                
CO-CHAIR ZULKOSKY  surmised the unfair trade  practices reference                                                               
in Section 3  does not withhold or hold harmless  any direct care                                                               
agreement from malpractice claims.                                                                                              
MS. FRANKLIN responded correct.                                                                                                 
3:40:02 PM                                                                                                                    
REPRESENTATIVE CLAMAN  posed a scenario  in which [the  office of                                                               
Special Litigation  and Consumer Protection], DOL,  filed a claim                                                               
related to direct  care agreements in [violation  of the consumer                                                               
protection act].  He surmised this  claim would be limited to the                                                               
kinds  of issues  within  Section 1,  such as  the  terms of  the                                                               
contract itself.                                                                                                                
MS. FRANKLIN answered correct.                                                                                                  
REPRESENTATIVE  CLAMAN requested  Ms. Franklin  to describe  what                                                               
kind of complaints those might be.                                                                                              
MS.  FRANKLIN replied  it would  be  a situation  where a  clinic                                                               
advertised  services at  some rate  or advertised  services in  a                                                               
particular way  so as  to attract consumers  to that  business in                                                               
competition with  other businesses and was  somehow misleading or                                                               
deceptive in the way that the  contract was presented and the way                                                               
that the  consumer was attracted  to the business or  was treated                                                               
by  the  business in  opposition  to  the  way that  the  statute                                                               
requires the  business to  operate.   So, in  the situation  of a                                                               
state action against a business, DOL  would look for a pattern of                                                               
multiple consumer  complaints where,  in its business  model, the                                                               
primary care  provider was attempting  to get  an edge up  on its                                                               
competition  by appearing  to offer  something  it really  didn't                                                               
offer or appearing to have rates that were substantially lower.                                                                 
3:42:22 PM                                                                                                                    
REPRESENTATIVE CLAMAN  concluded DOL would investigate  the false                                                               
or deceptive advertising of services.                                                                                           
MS. FRANKLIN responded  yes.  In further  response, she confirmed                                                               
[the office of Special Litigation  and Consumer Protection, DOL],                                                               
does not participate in medical malpractice claims.                                                                             
REPRESENTATIVE  CLAMAN  inquired  whether,  in  the  case  of  an                                                               
individual  complaint for  malpractice  against a  clinic, it  is                                                               
DOL's view that [under Section  3] the Unfair Trade Practices Act                                                               
provisions would now apply to the individual complaint.                                                                         
MS. FRANKLIN answered yes.  If  HB 92 were passed, a complaint by                                                               
an individual  patient against  a physician  in a  direct primary                                                               
care  practice  could have  counts  of  medical malpractice  and,                                                               
theoretically, also a complaint of  unfair trade practices.  From                                                               
a  legal  perspective,  the bill  could  provide  for  additional                                                               
3:44:09 PM                                                                                                                    
CO-CHAIR  SPOHNHOLZ  asked  how   claims  of  noncompliance  with                                                               
consumer protection laws are typically  brought to the [office of                                                               
Special Litigation and Consumer Protection, DOL].                                                                               
MS. FRANKLIN  replied that  consumer complaints  from individuals                                                               
are  first  brought for  mediation  of  consumer issues  and,  if                                                               
multiple  complaints  are  received   against  one  business,  an                                                               
investigation may be opened.   In addition, cases are referred by                                                               
other state  agencies and professional  licensing boards.   After                                                               
an  investigation, the  attorney general  determines whether  the                                                               
Unfair Trade Practices Act has been violated.                                                                                   
CO-CHAIR SPOHNHOLZ inquired whether  it is typically attorneys or                                                               
members of the  public that come to Ms. Franklin's  office with a                                                               
concern about unfair trade practices.                                                                                           
MS.  FRANKLIN  responded it  is  individual  consumers, they  are                                                               
anyone filing a complaint with her office.                                                                                      
3:46:00 PM                                                                                                                    
CO-CHAIR SPOHNHOLZ opened invited testimony.                                                                                    
3:46:21 PM                                                                                                                    
The committee took a brief at-ease.                                                                                             
3:46:41 PM                                                                                                                    
JAY  KEESE, Executive  Director, Direct  Primary Care  Coalition,                                                               
provided  a  PowerPoint  presentation entitled,  "Direct  Primary                                                               
Care  in 2019."    Turning to  slide 1,  Mr.  Keese informed  the                                                               
committee that the history of  this starts with a direct practice                                                               
act  that  passed  in  Washington  State.    It  was  essentially                                                               
included  in the  Affordable  Care Act  (ACA),  to define  direct                                                               
primary care (DPC)  - also known as medical homes  - as a medical                                                               
service  that  could be  offered  in  conjunction with  qualified                                                               
health plans.   Thus, patients covered by  ACA through exchanges,                                                               
or  through  their  employer,  could  contract  directly  with  a                                                               
qualified  health care  practice; primary  care was  removed from                                                               
qualified health plans to allow  DPC practices to deliver primary                                                               
care and  to allow  insurers to insure  against risk  and medical                                                               
circumstances,   such   as   acute  care   and   hospitalization.                                                               
Subsequently, [DPC] practices have  grown to over 1,000 practices                                                               
in 48 states and Washington, D.C.   Mr. Keese said the median fee                                                               
is about  $70 per person per  month, and about $165  for a family                                                               
of four.   He advised employer  claims data has shown  savings of                                                               
up to  20 percent of  the total cost  of care because  service by                                                               
primary care  providers is less expensive  and reduces downstream                                                               
expenses such as hospitalization and specialty care.                                                                            
3:48:54 PM                                                                                                                    
MR. KEESE moved  to slide 2 and said that  since ACA was enacted,                                                               
DPC  legislation  has passed  in  [26]  states, including  recent                                                               
legislation in Georgia.                                                                                                         
MR. KEESE drew attention to slide  3 and noted there is confusion                                                               
between DPC and concierge medicine.   The primary distinction, he                                                               
explained, is  concierge medicine provides medical  services that                                                               
are typically covered  by insurance and there are  extra fees for                                                               
noncovered services and a higher  level of access to a physician.                                                               
In DPC, fees  cover expanded access, in addition  to all payments                                                               
for medical care, without third party insurance reimbursement.                                                                  
MR.  KEESE  said  slide  4  illustrates  prices  for  lab  tests,                                                               
procedures,  and  drugs  offered   at  a  "typical  primary  care                                                               
practice."   He explained  that a  DPC practice  provides primary                                                               
care by physicians as well as  access to drugs to labs at greatly                                                               
discounted  prices.    For  example,  the  prescription  cost  of                                                               
Lexapro is  $113 for 30 pills,  but it can  be had at a  cash pay                                                               
price of  $4.80.  He pointed  out drugs can be  obtained for less                                                               
than an insurance co-pay and  savings on prescriptions are beyond                                                               
that of savings on primary care.                                                                                                
3:51:19 PM                                                                                                                    
MR.  KEESE continued  to slide  5 which  illustrated some  of the                                                               
arrangements  between direct  primary  care  practices and  self-                                                               
insured employers,  Medicare Advantage, state and  local employee                                                               
funds, and  other entities.  Slide  6 listed data related  to DPC                                                               
arrangements with large  employers, such as Boeing.   He said the                                                               
data indicates reductions in total cost  of care up to 20 percent                                                               
and that  employees with  higher health  care costs  have reduced                                                               
their expenses.                                                                                                                 
MR. KEESE turned to slides 7  and 8 to discuss state legislation.                                                               
He  advised some  states are  clarifying that  DPC practices  are                                                               
outside of  state insurance regulation and  are medical services.                                                               
Because  federal interpretation  of health  saving account  (HSA)                                                               
eligibility  rules  differ,  pending  federal  legislature  would                                                               
clarify that  individuals with  HSAs are eligible  to have  a DPC                                                               
and an HSA.  He  cautioned that the aforementioned legislation is                                                               
not currently in effect, thus  the Internal Revenue Service (IRS)                                                               
has  interpreted  DPCs  as  "other" coverage  and  DPCs  are  not                                                               
compatible with HSAs.                                                                                                           
3:55:52 PM                                                                                                                    
PHILIP  ESKEW,  DO,  JD,  MBA,   Family  Medicine  Physician  and                                                               
Attorney,  DPC Frontier,  noted he  is a  family physician  doing                                                               
direct  primary care  as well  as  a DPC  attorney.   He said  26                                                               
states  now  have  legislation  that  define  DPC  as  not  being                                                               
insurance.   The  motivation  for  defining DPC  is  to save  DPC                                                               
physicians, patients  and the Division  of Insurance  headaches -                                                               
it is taking a grey area in the  law and making it more black and                                                               
white and the Division of Insurance  has better things to do than                                                               
reading each contract in detail  for each DPC practice that opens                                                               
up.   States that  have done  this well and  been happy  about it                                                               
have given  a clear  definition of  what DPC  is and  [Version E]                                                               
does  that.   He  said  [Version E]  defines  DPC  as outside  of                                                               
insurance  and prohibits  what he  calls  "double dipping"  which                                                               
distinguishes  DPC  from  concierge,  and the  bill  defines  the                                                               
mandatory disclosures  in the [direct  care] contract  and avoids                                                               
inadvertently blocking  the state  or an  employer down  the road                                                               
from adopting and paying for DPC.                                                                                               
DR.   ESKEW   returned   to    the   earlier   discussion   about                                                               
patient/consumer  protection.   He  said his  impression is  that                                                               
even  without the  consumer protection  provision  in this  bill,                                                               
"that  department"   would  probably   still  default   and  have                                                               
jurisdiction to be involved in  a patient protection dispute even                                                               
when it  isn't explicitly stated.   He said he thinks  that would                                                               
already apply to  a standard fee for service  practice that might                                                               
be open  and independent in  the state  of Alaska presently.   He                                                               
said most states have not felt  the need to explicitly state that                                                               
3:58:09 PM                                                                                                                    
DR.  ESKEW stated  he is  concerned about  Version E's  reporting                                                               
requirements to the  [Division] of Insurance on page  2, which is                                                               
modeled after  Washington's law.  He  pointed out that of  the 26                                                               
states that  DPC laws, only  two have any  reporting requirements                                                               
to the department of insurance,  which are Washington and Oregon;                                                               
the others have not found it  necessary for a variety of reasons.                                                               
He  pointed out  that the  intent of  the bill  is to  reduce the                                                               
burdens on  the Division  of Insurance and  the bill  states that                                                               
the Division of  Insurance does not have  jurisdiction over these                                                               
types of  contracts because they are  not a transfer of  risk and                                                               
they involve  a relationship  between a  physician and  a patient                                                               
and  historically those  relationships are  policed by  the state                                                               
medical board.  He  said he thinks it would be  wise to have this                                                               
policed  by  Alaska's  state  medical  board  as  well  and  that                                                               
reporting to the Division of Insurance  would be a burden to that                                                               
division.   He advised that  a 2018 report from  Washington State                                                               
indicates there has not been  one patient complaint in Washington                                                               
State for ten years [document not provided].                                                                                    
DR. ESKEW  noted 48  states already allow  DPC physicians  to see                                                               
Medicaid patients in the sense  that freedom of contract applies,                                                               
and  those  patients allowed  to  pay  to  join a  DPC  practice.                                                               
However,  laws  in Kentucky  and  Colorado  prohibit any  private                                                               
contracting  with  Medicaid  patients  in those  states,  DPC  or                                                               
otherwise.   He supported  Version E's  removal of  references to                                                               
Medicaid and Medicare  because the initial bill  about DPC should                                                               
be  about just  defining  it.   If  Alaska wants  to  do a  pilot                                                               
program,  be  it in  the  Medicaid  space  or  be it  with  state                                                               
employees, he  would do that  with a second piece  of legislation                                                               
down the road after people understand what DPC is and should be.                                                                
4:01:30 PM                                                                                                                    
REPRESENTATIVE  DRUMMOND  understood  that 48  states  allow  DPC                                                               
physicians to see Medicaid patients.   She asked about provisions                                                               
in state legislation that address Medicare patients.                                                                            
DR. ESKEW replied  that Medicare is different than  Medicaid.  He                                                               
explained physicians volunteer  to participate/enroll in Medicaid                                                               
programs.    In  some  states,   physicians  can  participate  in                                                               
Medicaid and  still have the  freedom to privately  contract, but                                                               
other  states don't  allow physicians  who privately  contract to                                                               
formally enroll  in Medicaid.   Medicare is different.   In order                                                               
to  privately  contract  for  covered  services  under  Medicare,                                                               
physicians must choose to "opt-out"  of Medicare, which means the                                                               
physician is still credentialed  with Medicare, but the physician                                                               
promises not  to charge Medicare,  and the patient agrees  not to                                                               
seek reimbursement from Medicare,  thereby allowing the physician                                                               
and the patient to contract for services that Medicare covers.                                                                  
4:03:00 PM                                                                                                                    
REPRESENTATIVE TARR  stated Alaska's  health care system  is more                                                               
fragile than that  of other states.  She spoke  in support of the                                                               
reporting requirement  provisions of  the bill and  requested Dr.                                                               
Eskew's thoughts on this being overly burdensome for providers.                                                                 
DR. ESKEW responded  DPC physicians seek to spend  more time with                                                               
patients and less time with  documentation.  He suggested that if                                                               
Alaska wants  to track data it  should be specific about  what is                                                               
wanted and  specific about  where to  house it.   He  pointed out                                                               
that  Version  E puts  the  burden  of  aggregating data  on  the                                                               
[Division]  of  Insurance, which  he  thinks  a strange  decision                                                               
since it is being said that  this is not insurance.  He suggested                                                               
the burden  of aggregating  data be put  elsewhere, such  as with                                                               
the state medical  board and that there be specifics  on what the                                                               
medical  board  should track.    Currently,  he noted,  the  bill                                                               
includes a  statement that gives  [the division] cart  Blanche to                                                               
add  lots of  additional  requirements and  things  that must  be                                                               
tracked and that could become quite burdensome in theory.                                                                       
4:05:28 PM                                                                                                                    
REPRESENTATIVE TARR  asked whether  the provision  for additional                                                               
reporting might discourage providers from participating.                                                                        
DR. ESKEW answered  that if the burdens became  great enough then                                                               
providers might  not sign up.   He advised that if  the bill does                                                               
not become law, DPC practices  in Alaska will continue to operate                                                               
under the  purview of the  [Division] of Insurance, which  is the                                                               
situation HB 92 seeks to avoid by defining DPC.                                                                                 
4:06:45 PM                                                                                                                    
CO-CHAIR SPOHNHOLZ  reviewed the limited reports  required by the                                                               
bill:  the  number of health care providers in  the practice; the                                                               
number of  patients the practice  has the capacity to  serve; the                                                               
number of patients  who entered in or maintained  a DPC agreement                                                               
with the health  care practice in the previous  calendar year and                                                               
the fee paid.  She said  any practice would have this information                                                               
readily available.                                                                                                              
DR. ESKEW  agreed that those reports  are easy to do,  except for                                                               
[Section 1]  (c)(4), which  states, "other  information requested                                                               
by the division."                                                                                                               
CO-CHAIR  SPOHNHOLZ asked  for the  number of  states that  allow                                                               
Medicaid payments for direct care agreements.                                                                                   
DR. ESKEW  replied that there  are some  states that have  or had                                                               
Medicaid pilots in place, such  as Michigan and Washington State;                                                               
however, most  states have not  formalized Medicaid  payments for                                                               
DPC.    Oklahoma debated  a  reimbursement  system in  which  the                                                               
patient would  be reimbursed  for a portion  of the  monthly fee,                                                               
similar to  a voucher or food  stamp system.  If  Alaska takes no                                                               
action on Medicaid [by HB 92],  he said, "physicians will be able                                                               
to find a  way to see Medicaid patients should  [ these patients]                                                               
choose to join a DPC practice and pay for care on their own.                                                                    
4:10:11 PM                                                                                                                    
ERIKA  BLISS, MD,  Equinox Primary  Care, informed  the committee                                                               
she was formally  CEO of [Qliance Medical Group  (Qliance)].  She                                                               
said she  supports the  previous testimony by  Mr. Keese  and Dr.                                                               
Eskew.  Dr. Bliss said, "We  were active in getting the initial -                                                               
and  then subsequent  amended  - laws  passed  in Washington  and                                                               
things have  operated fairly well  since then."  She  agreed with                                                               
Dr. Eskew that the monitoring  process in Washington State is not                                                               
useful  and explained  the  intent of  reporting  was to  protect                                                               
consumers  from situations  that did  not  occur.   She said  DPC                                                               
practices  are organizations  trying to  revive primary  care and                                                               
create  a successful  business model  that  allows providers  the                                                               
time needed  to care for patients.   Further, Dr. Bliss  said the                                                               
reported data  has not  been utilized  and assured  the committee                                                               
that [if HB 92 becomes law]  there are other avenues for consumer                                                               
recourse.   Although Qliance  was closed  in 2017,  DPC practices                                                               
are growing around  the country due to the needs  of those who do                                                               
not have any, or adequate  insurance, or adequate insurance-based                                                               
primary  care.   She said  she  now has  a solo  DPC practice  in                                                               
Seattle,  which is  the only  way she  can provide  comprehensive                                                               
primary  care to  patients who  have significant  medical issues.                                                               
She said  she has more time  to provide care, avoids  the hassles                                                               
of billing insurance companies, and sets her prices.                                                                            
4:14:54 PM                                                                                                                    
DR. BLISS  further explained her  practice is not unique  in that                                                               
she  serves a  wide range  of socioeconomic  levels; some  of her                                                               
economically-deprived patients pay full costs,  however, it is up                                                               
to her and  her patients to work out discounts  and payment plans                                                               
to  maintain  patients'  access   to  care  when  their  economic                                                               
circumstances change.  Qliance was  the first DPC organization to                                                               
undertake a  largescale Medicaid  program pilot.   Unlike Alaska,                                                               
Washington State has  a Medicaid managed care  environment and in                                                               
2014, Qliance  had a combination of  two-thirds Medicaid patients                                                               
and  one-third  ACA  exchange  patients for  a  total  of  35,000                                                               
members.    Although Qliance  failed  due  to problems  with  the                                                               
Medicaid managed care  companies and the lack of  controls at the                                                               
state level,  the program reduced  the cost of care  for Medicaid                                                               
recipients,   especially  for   chronically  sick   and  disabled                                                               
patients.   In addition,  patients were  very pleased  with their                                                               
care and improved health.  Dr. Bliss remarked:                                                                                  
     We got quite a few  people actually off of Medicaid and                                                                    
     back to  work, and  I think  that that  probably didn't                                                                    
     mesh well  with the goals  of some of the  managed care                                                                    
     folks,  and   unfortunately,  it's  sort   of  perverse                                                                    
     incentives  in some  cases.   But  ...  in Alaska,  you                                                                    
     might want  to really think  about it, since  you still                                                                    
     have a direct  contracting relationship with providers,                                                                    
     this  could be  a  really  interesting opportunity  for                                                                    
DR. BLISS continued  to explain Alaska could  create an incentive                                                               
for providers to serve Medicaid  patients well, and over time, by                                                               
paying  a reasonable  monthly fee,  similar to  Qliance; however,                                                               
Qliance  overinvested  in  its   Medicaid  pilot  and  relied  on                                                               
assurances from the plan and the state.                                                                                         
4:19:38 PM                                                                                                                    
REPRESENTATIVE TARR surmised  that as a business  owner Dr. Bliss                                                               
can determine how many discounted rates she can offer.                                                                          
DR. BLISS  replied correct.   At one time, she  recalled, medical                                                               
practices were  expected to provide  a certain amount  of charity                                                               
care, but  some HMOs are prevented  from doing so.   She said DPC                                                               
providers can choose rates for patients.                                                                                        
REPRESENTATIVE TARR offered her  understanding that DPC practices                                                               
can discount medical care, but not prescriptions.                                                                               
DR.  BLISS  responded correct  and  said  a  benefit of  the  DPC                                                               
business model  is that it allows  her and her staff  to advocate                                                               
for patients  and search  for better prices.   In  certain states                                                               
DPC  practices can  work together  and negotiate  "package deals"                                                               
on, say, radiology studies.                                                                                                     
4:23:29 PM                                                                                                                    
REPRESENTATIVE TARR,  speaking from her experience,  related that                                                               
insurance rates in the price  range of $70-$100 per month usually                                                               
have a high  deductible and little or no preventative  care.  She                                                               
asked how  DPC contracts for  the same price can  provide primary                                                               
care as described.                                                                                                              
DR. BLISS  answered that a  catastrophic insurance  plan provides                                                               
coverage  against  a terrible  event;  in  Washington State,  the                                                               
cheapest  insurance  possible -  including  a  high deductible  -                                                               
costs $300 per  month.  In contrast, an individual  entering in a                                                               
DPC  contract purchases  care and  a membership  in the  practice                                                               
that will  provide on-demand primary  care:  all  an individual's                                                               
preventable  and primary  care  needs, when  and  where they  are                                                               
needed.    She described  several  DPC  office efficiencies  that                                                               
lower the cost  of the delivery of care  and increase flexibility                                                               
for the  patient and provider;  further, DPC lowers  the barriers                                                               
to  care and  encourages  individuals to  use  primary care  more                                                               
often  in order  to  avoid complications  and  emergencies.   Dr.                                                               
Bliss said  that pairing DPC  with a catastrophic  insurance plan                                                               
would provide "pretty decent" health care and health coverage.                                                                  
4:28:39 PM                                                                                                                    
CO-CHAIR   SPOHNHOLZ   returned   attention  to   the   reporting                                                               
requirements  in  Washington State  and  asked  what elements  of                                                               
reporting are onerous to Washington's DPC providers.                                                                            
DR. BLISS  replied that  the requirements are  not onerous.   She                                                               
said her objection  at first was that DPC  providers have nothing                                                               
to do with  the insurance commissioner because  DPC practices are                                                               
not  insurance, they  are businesses  providing medical  care and                                                               
therefore  should be  governed by  the  appropriate agencies  for                                                               
commerce and for medical affairs.   She cautioned Americans don't                                                               
know  that   the  difference  between  health   care  and  health                                                               
insurance is that health insurance protects one against risk.                                                                   
CO-CHAIR SPOHNHOLZ  understood Dr.  Bliss to  be saying  that the                                                               
reporting isn't onerous, it is just in the wrong place.                                                                         
DR. BLISS  clarified it  is onerous  because the  reporting isn't                                                               
being put to good use and  perpetuates the notion that all things                                                               
have  to eventually  roll up  into insurance.   She  related that                                                               
most [DPC providers] would like  to see the departments of health                                                               
in their states or legislators assign  some other body to look at                                                               
the system of  delivery of care and take it  seriously as a piece                                                               
of the delivery system and study it as such.                                                                                    
4:32:18 PM                                                                                                                    
REPRESENTATIVE JACKSON commented  that she looks at  this as "old                                                               
fashioned doctor-patient  care before insurance blew  up ... when                                                               
they did  house calls."   She said she therefore  understands the                                                               
statement  of having  to report  anything to  insurance companies                                                               
because this isn't  insurance, it is a business  with health care                                                               
professionals to their patients.   She surmised that Dr. Bliss is                                                               
saying the  reporting should go  to the state medical  board, not                                                               
the [Division of Insurance].                                                                                                    
DR. BLISS replied yes.                                                                                                          
REPRESENTATIVE  JACKSON  surmised  [HB  92]  would  attract  more                                                               
doctors because  they wouldn't have  to go through the  rigors of                                                               
DR. BLISS agreed  that this is true.  In  her experience, medical                                                               
doctors, residents,  and medical students around  the country are                                                               
excited about  practicing primary care, although  not all doctors                                                               
are willing to take the risk of entering a DPC business.                                                                        
4:36:05 PM                                                                                                                    
MANDY WEEKS  GREEN, Senior Health  Policy Analyst, Office  of the                                                               
Insurance  Commissioner  (OIC),  Washington State,  said  she  is                                                               
responsible  for  reviewing   and  approving  DPC  registrations,                                                               
reporting  noncompliance,  and  monitoring DPC  practices.    She                                                               
related  that  the  laws  of  Washington  State  consider  direct                                                               
practices to  be insurance  unless they apply  for -  and qualify                                                               
for  - the  exception for  insurance.   So,  it is  not that  all                                                               
direct practices are  an exception, but if a  practice does apply                                                               
and is conducting its business  within the bounds of the statute,                                                               
then it does qualify for  the exception.  However, many practices                                                               
do not  apply to OIC  and do  not initially qualify  because they                                                               
offer  other  services,  or  do  not  operate  within  the  legal                                                               
boundaries of DPC, thus OIC  helps practices comply with the laws                                                               
and attain the exception.                                                                                                       
4:37:48 PM                                                                                                                    
CO-CHAIR SPOHNHOLZ  surmised that in Washington  State, practices                                                               
must apply [to OIC] to be exempted from insurance.                                                                              
MS.  WEEKS GREEN  replied yes.    She explained  that a  practice                                                               
applies for registration  before operating a DPC  practice.  This                                                               
registration requirement before a  direct practice operates is an                                                               
important protection for consumers because  it enables the OIC to                                                               
review  a   direct  practitioner's  application,   contract,  and                                                               
marketing  materials before  services are  offered to  consumers.                                                               
It  is  the  best  time  for  OIC  to  intervene  and  help  make                                                               
corrections  to prevent  consumers from  being harmed  and ensure                                                               
compliance with the  direct practice laws.  For  example, OIC has                                                               
been able to  prevent several billing structures  that were based                                                               
on a  person's health  status, such as  charging higher  fees for                                                               
consumers   with  certain   conditions  or   chronic  conditions.                                                               
Washington State  has a general prohibition  on discrimination as                                                               
well as a  specific prohibition to prevent billing  fees that are                                                               
based on a person's health status.                                                                                              
4:38:52 PM                                                                                                                    
MS.  WEEKS   GREEN  pointed  out  that   Washington  restricts  a                                                               
provider's reasons for declining or  terminating a patient.  This                                                               
helps OIC when  reviewing contracts to ensure  that consumers are                                                               
properly  advised  of  their rights  around  termination.    When                                                               
reviewing  applications  containing  contracts that  reserve  the                                                               
right to terminate,  accept, or decline patients  for any reason,                                                               
OIC  works  with those  practices  to  revise their  language  to                                                               
reflect the lawful language requirements.                                                                                       
MS. WEEKS GREEN further pointed  out that Washington law has been                                                               
helpful in  setting limitations around billing,  cancelation, and                                                               
retaining  unused fees.   Direct  practices typically  bill on  a                                                               
monthly basis in advance for  the month.  Washington law requires                                                               
a  refund  for  the  pro-rated  unused fees  from  the  date  the                                                               
provider was notified of cancelation.   Having this provision has                                                               
enabled  OIC  to  remove  clauses   in  several  direct  practice                                                               
contracts that  sought to retain  the money through  the contract                                                               
period.  The  OIC has also been able to  prevent direct practices                                                               
from  charging consumers  cancelation fees.   Additionally,  if a                                                               
provider would  like to collect  money for  more than a  month in                                                               
advance -  for example, on  an annual basis -  Washington statute                                                               
says  a trust  account must  be set  up to  retain the  collected                                                               
money and  ensure that those  fees are still only  withdrawn from                                                               
the  account  on  a  monthly  basis.    There  are  also  several                                                               
requirements  that must  be contained  within the  contract which                                                               
were developed  to protect consumers.   One of those is  that the                                                               
contracts  must encourage  the consumers  to retain  insurance or                                                               
purchase supplemental plans to cover emergencies.                                                                               
4:40:33 PM                                                                                                                    
CO-CHAIR ZULKOSKY  remarked that  these consumer  protections are                                                               
interesting  and  comprehensive,  as  she wants  to  ensure  that                                                               
Alaskans  are protected  as legislators  consider this  proposal.                                                               
She requested Ms.  Weeks Green to discuss the  resources that are                                                               
needed within the Washington OIC  to uphold these protections and                                                               
to provide the work being described.                                                                                            
MS.  WEEKS GREEN  responded she  is the  sole person  who manages                                                               
direct practices.   It's only a small portion of  her duties, she                                                               
said, because she is a health  care policy analyst, so it doesn't                                                               
take  her an  exceptional amount  of time  to review  a contract,                                                               
communicate with  a provider, and  discuss needed changes.   What                                                               
may  involve  more time  for  investigation  and some  additional                                                               
resources, but  not very much,  is when  unlicensed, unregistered                                                               
entities are  offering services that are  inappropriate under the                                                               
CO-CHAIR ZULKOSKY requested  a written copy of  Ms. Weeks Green's                                                               
MS. WEEKS GREEN answered she would be happy to.                                                                                 
4:42:13 PM                                                                                                                    
REPRESENTATIVE CLAMAN  observed the  committee has  been provided                                                               
with the  Washington statutes.   He inquired  whether regulations                                                               
have been issued that relate to  this or whether everything is in                                                               
MS. WEEKS  GREEN replied everything  is in statute  and currently                                                               
there are not any regulations.                                                                                                  
REPRESENTATIVE CLAMAN offered his  understanding that even though                                                               
this  is technically  not insurance,  the Washington  Legislature                                                               
effectively  decided  that  it  would  be  subject  to  insurance                                                               
department  supervision as  opposed  to  the consumer  protection                                                               
MS. WEEKS GREEN responded that this  is insurance if it is looked                                                               
at from  the definition  of insurance  because insurance  is risk                                                               
shifting.  This  means that [a practitioner] accepts  the risk of                                                               
whether  [the practitioner]  or the  client is  going to  receive                                                               
more benefit or  less benefit from the contract.   So, if billing                                                               
on a  monthly basis, a doctor  may receive more payment  from the                                                               
patient if  the patient  doesn't see the  doctor every  month, so                                                               
the doctor would be receiving the  benefit of that contract.  The                                                               
risk shifting  comes when the  patient utilizes the  service more                                                               
than has been use accounted for.                                                                                                
REPRESENTATIVE CLAMAN  asked whether Washington  has specifically                                                               
defined these  agreements as  a form  of an  insurance agreement,                                                               
whereas the proposal before the  committee would specifically say                                                               
that it's not an insurance agreement.                                                                                           
MS. WEEKS GREEN  answered:  "It is an insurance  agreement.  It's                                                               
what is  accepted from the  insurance code as long  as everything                                                               
is done  appropriately.  So ...  we accept it from  regulation as                                                               
long as everything is operating smoothly."                                                                                      
4:44:18 PM                                                                                                                    
REPRESENTATIVE JACKSON  offered her understanding that  Ms. Weeks                                                               
Green is  saying that  direct primary care  is an  insurance, but                                                               
technically  it is  a service  between a  medical provider  and a                                                               
patient.    She inquired  whether  this  threatens the  insurance                                                               
industry in any way and is competitive.                                                                                         
MS. WEEKS GREEN replied she  doesn't know that competition is the                                                               
underlying element  of why  Washington regulates  [direct primary                                                               
care practices].   She  said Washington  is concerned  about them                                                               
because they  can cause consumer  harm when they're  not operated                                                               
appropriately  and within  the  bounds.   She  added she  doesn't                                                               
believe that  insurance companies  are necessarily  threatened by                                                               
the  practice  of  direct  practices, but  she  does  think  that                                                               
healthier people  might be pulled  out of the market  into direct                                                               
practices.  However, Washington  doesn't know anything about that                                                               
necessarily because it is unable to get into studies on that.                                                                   
REPRESENTATIVE JACKSON  understood Ms.  Weeks Green to  be saying                                                               
insurance is  in it to  protect the  patient.  She  asked whether                                                               
that wouldn't be  the purpose of the state medical  board to make                                                               
sure the doctors are licensed and have the qualifications.                                                                      
MS.  WEEKS GREEN  responded  that  OIC can  report  to the  state                                                               
medical board.   Any violation  of the  insurance code is  also a                                                               
violation.   Any violation under  the direct practice  statute is                                                               
also a violation under the ethics  board of the medical board, so                                                               
there is the ability to cooperate for investigations.                                                                           
REPRESENTATIVE  JACKSON  clarified  she   is  asking  as  to  why                                                               
Washington has  the OIC looking  out for the concerns  and safety                                                               
of the people rather than Washington's medical board.                                                                           
MS. WEEKS  GREEN answered that OIC  is where it landed.   The OIC                                                               
does consider it insurance, it  isn't a pay-for-service model, it                                                               
isn't "I pay  my provider $10 to  go see them."  It  is one thing                                                               
if  a  provider wanted  to  charge  patients  a nominal  fee  and                                                               
because the  provider wants  to operate  a low-income  clinic and                                                               
charge the patient $5 instead of  $80 although those $5 could add                                                               
up to $80 a  month.  It is another thing when  a provider says he                                                               
or she is  going to take the  risk that a patient may  or may not                                                               
use this service.                                                                                                               
REPRESENTATIVE JACKSON  maintained that  that is exactly  what it                                                               
is doing, just like when  she purchases an extra maintenance plan                                                               
on  her vehicle,  she realizes  she may  not use  it, but  if she                                                               
needs  it it's  there.   So,  she concluded,  that  would be  the                                                               
choice of the patient.                                                                                                          
MS. WEEKS GREEN replied that that is insurance, too.                                                                            
4:47:50 PM                                                                                                                    
CO-CHAIR  SPOHNHOLZ   observed  from  the  [Direct   health  care                                                               
practices in Washington, Annual  report to the Legislature, dated                                                               
12/1/18] that there were over  18,000 direct practice [patients].                                                               
She inquired about  the number of contracts out of  the number of                                                               
practitioners that are  found by OIC to be problematic  or not in                                                               
compliance with state law on an annual basis.                                                                                   
MS. WEEKS  GREEN responded  that OIC  doesn't receive  that many,                                                               
which is why it doesn't involve a lot of her time.                                                                              
CO-CHAIR SPOHNHOLZ  observed from the  report that there  were 41                                                               
direct practices in 2018 in the state of Washington.                                                                            
MS. WEEKS  GREEN answered that  those 41 practices  are practices                                                               
that are continuing  to operate.  She guessed  OIC receives maybe                                                               
five  applications  a  year,  but OIC  suspects  there  are  many                                                               
entities that  are not  applying with the  OIC and  are operating                                                               
without  a  permission  to  operate.   The  number  of  practices                                                               
applying  is very  low, but  the  number of  practices that  have                                                               
clauses within their  contract that create some  problem with the                                                               
direct practice  statute is fairly  high.  She  has conversations                                                               
with about  50-75 percent  of direct  practitioners to  help them                                                               
resolve  their  contractual  issues, just  to  protect  consumers                                                               
during the registration process.   As long as [practitioners] are                                                               
coming in  before they are  operating it  is usually very  easy -                                                               
she discusses it with them, reviews  the law, talks to them about                                                               
why  it doesn't  fit within  the law  confines, or  why it  harms                                                               
consumers, and  usually the practitioners  readily agree  to make                                                               
the change.                                                                                                                     
4:49:51 PM                                                                                                                    
REPRESENTATIVE  CLAMAN  asked whether  it  is  the case  that  if                                                               
people  have this  insurance for  the direct  practice, they  are                                                               
also required to  have another layer of insurance  behind that as                                                               
part of Washington's insurance coverage requirements.                                                                           
MS.  WEEKS  GREEN  replied  no,  it is  just  required  that  the                                                               
practices  encourage people  to  have an  emergency  plan like  a                                                               
high-deductible health plan.                                                                                                    
4:50:30 PM                                                                                                                    
MS. WEEKS GREEN pointed out  that Washington is seeing a changing                                                               
landscape of  direct practices.   She  said Washington  is seeing                                                               
more and more innovation and  expansion into new models of direct                                                               
practice  bundling with  non-primary care  services and  bundling                                                               
and discounts  on services with labs,  providers, and pharmacies.                                                               
Also being  seen are  entities that are  trying to  create direct                                                               
care practice networks  and network plans.  An  important part of                                                               
Washington  law,  she  continued,  is  that  Washington  prevents                                                               
employer  direct  practice plans.    Despite  this, OIC  receives                                                               
consumer complaints  about employer  based direct  practice plans                                                               
and  OIC has  discovered many  entities that  are offering  these                                                               
plans  without being  registered.   When  Washington's laws  were                                                               
reviewed and written, these changes  in technology and innovation                                                               
were not  expected.  Currently,  OIC has received  an application                                                               
for  direct practice  that isn't  located in  Washington, but  it                                                               
would like to provide tele-med  primary care services entirely to                                                               
MS. WEEKS GREEN  advised that it is important to  note that these                                                               
innovations and expansions are not  coming from registered direct                                                               
practices  or networks;  the consumer  complaints  are not  about                                                               
those practices.  Many of  these entities have never sought OIC's                                                               
approval to  operate or  OIC's guidance.   She said  she believes                                                               
that had Washington been able  to foresee these changes happening                                                               
in  direct practice  it  likely would  have  set more  parameters                                                               
around  permissible direct  practice structures.   While  it once                                                               
seemed like a  small number of providers, it has  exploded due to                                                               
innovation and technology  and it is probably  going to continue.                                                               
She offered her hope that this  helps the committee to prepare to                                                               
address  these changes  and innovations  in  the direct  practice                                                               
because it  will help  to preserve the  model that  the committee                                                               
envisions in the future.                                                                                                        
4:52:20 PM                                                                                                                    
CO-CHAIR SPOHNHOLZ observed from  the 2018 Washington report that                                                               
there were  40 practices  in 2017  and 41 in  2018, but  that Ms.                                                               
Weeks Green used the word  "exploded" to describe the increase in                                                               
the number of participants and  that doesn't sound like exploding                                                               
to her.  She requested Ms. Weeks Green to explain.                                                                              
MS. WEEKS  GREEN responded OIC  thinks there are many  plans that                                                               
are operating without OIC's permission.                                                                                         
CO-CHAIR  SPOHNHOLZ asked  whether  OIC is  doing anything  about                                                               
MS. WEEKS GREEN  answered that OIC is looking into  it.  She said                                                               
OIC gets  consumer reports  on a  regular basis  and this  is the                                                               
first that  OIC is learning of  these other entities.   She noted                                                               
OIC doesn't put consumer complaints  in its report if they're not                                                               
about licensed  direct practices.   A lot  of the  complaints are                                                               
about unlicensed entities,  so those numbers are not  seen in the                                                               
report that OIC files with the  legislature.  The OIC is seeing a                                                               
lot  of  new models  and  new  innovations  that it  hasn't  seen                                                               
before, but they  are not from entities that  are contacting OIC.                                                               
Usually  OIC is  hearing  about it  from  consumer complaints  or                                                               
being notified about it from other  direct practices.  For OIC it                                                               
feels like  an explosion because it  feels like a rush,  a lot of                                                               
change happening very  quickly.  In further  response to Co-Chair                                                               
Spohnholz, she confirmed it is primarily amongst unlicensed                                                                     
practices or complaints about potentially unlicensed practices.                                                                 
4:54:11 PM                                                                                                                    
CO-CHAIR SPOHNHOLZ held over HB 92.                                                                                             
4:55:16 PM                                                                                                                    
There being no further business before the committee, the Health                                                                
and Social Services Committee meeting was adjourned at 4:55 p.m.                                                                

Document Name Date/Time Subjects
HB92 Supporting Document - WA 2018 Direct Practice Report 5.1.19.pdf HHSS 5/2/2019 3:00:00 PM
HB 92
HB92 Supporting Document - WA Statutes 5.1.19.pdf HHSS 5/2/2019 3:00:00 PM
HB 92
HB92 ver E - blank sponsor substitute.pdf HHSS 5/2/2019 3:00:00 PM
HB 92
HB92 - Presentation from Direct Primary Coalition 5.1.19.pdf HHSS 5/2/2019 3:00:00 PM
HB 92
HB92 Sectional Analysis ver E 5.1.19.pdf HHSS 5/2/2019 3:00:00 PM
HB 92
HB92 - Testimony.pdf HHSS 5/2/2019 3:00:00 PM
HB 92