HB 451: "An Act establishing the Alaska Health Insurance Corporation and requiring licensed health care providers to comply with certain statutes and regulations relating to the corporation; relating to disability insurance claims processing and to approval of rates for disability insurance, including health insurance; and providing for an effective date."

00HOUSE BILL NO. 451 01 "An Act establishing the Alaska Health Insurance Corporation and requiring 02 licensed health care providers to comply with certain statutes and regulations 03 relating to the corporation; relating to disability insurance claims processing and 04 to approval of rates for disability insurance, including health insurance; and 05 providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. FINDINGS AND PURPOSE. (a) The legislature finds that 08 (1) health care services and health insurance in the state are becoming 09 prohibitively costly, and a growing number of our citizens are unable to obtain health 10 insurance or pay for needed care; 11 (2) the reasons that health care expenditures are increasing are complex and 12 are accounted for by general inflation; by inflation specific to the health care industry or 13 changes in the cost of labor, capital, and other industry factors; by population growth; by 14 utilization or the number of times people use health care services; by increasingly complex

01 and costly technology and other resources; by the aging of the population; and the practice 02 of defensive medicine; 03 (3) the primary responsibility for controlling health care expenditures in the 04 state should be borne by Alaska health care providers, particularly physicians, on whose orders 05 and recommendations most health care expenditures are incurred; at present, federal and state 06 antitrust laws effectively preclude health care providers from engaging in voluntary self-regulation regarding fees and 07 volume of services; this Act mandates the participation by health 08 care providers in the peer review process of cost control and volume control to assure that 09 health care expenditures do not increase faster than the general inflation rate; if voluntary self-regulation fails to 10 control health care costs, mandatory cost controls should be imposed; 11 (4) in order to increase access to health care by containing the rate of increase 12 of health care expenditures and by making basic health insurance available to the people in 13 the state, it is essential that the factors contributing to the increasing costs of health care and 14 the unavailability of health insurance be addressed comprehensively and consistently; 15 (5) there is a compelling need for a strong, clear focus on public health issues 16 in the interest of protecting and promoting the public health of the residents of the state; 17 (6) there are inherent problems in our health system infrastructure, including 18 the lack of physical access to services in many areas of the state; 19 (7) the state should immediately begin to create a system that will provide 20 health insurance to all residents of the state, control health care expenditures, preserve the high 21 quality of care that residents demand, preserve the individual's choice of health care provider, 22 and, by doing so, avoid the imposition of a federally mandated health care reform system on 23 the state; 24 (8) because the state constitution's single subject rule precludes the 25 consideration of comprehensive tort reform in the same legislative enactment as health care 26 reform, tort reform should be addressed in a separate legislative enactment; 27 (9) a market based single payer system is preferable to either an employer 28 mandate or a "pay or play" approach because 29  (A) both of the employer mandate approaches are based on the current 30 mix of public, employer, and individual financing that inevitably creates coverage gaps 31 for some people, particularly when their employment status changes;

01  (B) health care financing approaches that require all businesses to 02 provide health care benefits or that levy additional taxes on those businesses threaten 03 the economic viability of many small businesses in the state; 04  (C) multiple payer systems would not necessarily address the problems 05 of cost shifting that exist in our current system; and 06  (D) systems that are built upon the existing public and private financing 07 arrangements can be expected to inherit the inefficiencies in those arrangements. 08 (b) The purpose of this Act is to 09 (1) increase access to health care by containing the rate of increase of health 10 care expenditures and by making health insurance available to the people in the state; 11 (2) create a market based single payer state health insurance system that 12 provides health insurance to all residents of the state, that utilizes market forces to make 13 consumers more aware of the actual costs of health services, and that provides consumers with 14 information enabling them to make more informed purchasing decisions; 15 (3) provide a structure for addressing the health care needs of the state 16 including 17  (A) developing a comprehensive long-term care plan that integrates 18 support services and that promotes human dignity; 19  (B) use of preventive and wellness programs to reduce health care 20 costs; and 21  (C) the different health care needs of urban and rural areas of the state. 22 (c) It is not the purpose of this Act to change the existing agreements between 23 employers and employees, including retirees, in a manner that would diminish health care 24 benefits. 25 * Sec. 2. AS 08.02 is amended by adding a new section to read: 26  Sec. 08.02.025. COMPLIANCE WITH REQUIREMENTS OF STATE 27 HEALTH INSURANCE CORPORATION. A health care provider shall comply with 28 the required price list availability provisions of AS 21.58.230 and the health care data 29 system provisions of AS 21.58.260 that are applicable to health care providers 30 including regulations adopted by the Alaska Health Insurance Corporation under those 31 provisions. Notwithstanding another provision of law, the license of a health care

01 provider is not valid unless the health care provider complies with this section. In this 02 section, "health care provider" has the meaning given in AS 21.58.400. 03 * Sec. 3. AS 21.39.020 is amended to read: 04  Sec. 21.39.020. APPLICABILITY. (a) This chapter applies to disability 05 insurance, to all forms of casualty insurance, including fidelity, surety, and guaranty 06 bonds, to all forms of fire, marine, and inland marine insurance, and to a combination 07 of any of them, or risks or operations in this state. Inland marine insurance includes 08 insurance defined by statute, or by interpretation of statute, or if not defined or 09 interpreted, by ruling of the director, or as established by general custom of the 10 business, as inland marine insurance. 11  (b) This chapter does not apply to 12  (1) reinsurance, other than joint reinsurance to the extent stated in 13 AS 21.39.110; 14  (2) [DISABILITY INSURANCE; 15  (3)] insurance of vessels or craft, their cargoes, marine builders' risks, 16 marine protection and indemnity, or other risks commonly insured under marine, as 17 distinguished from inland marine insurance policies; 18  (3) [(4)] insurance against loss of or damage to aircraft or against 19 liability, other than workers' compensation and employer's liability, arising out of the 20 ownership, maintenance, or use of aircraft; or, to insurance of hulls of aircraft, 21 including their accessories and equipment. 22 * Sec. 4. AS 21.39.030(a) is amended to read: 23  (a) Rates shall be made in accordance with the following provisions: 24  (1) rates may [SHALL] not be excessive, inadequate, or unfairly 25 discriminatory; 26  (2) consideration shall be given to past and prospective loss experience 27 inside and outside this state, to the conflagration and catastrophe hazards, to a 28 reasonable margin for underwriting profit and contingencies, to dividends, savings, or 29 unabsorbed premium deposits allowed or returned by insurers to their policyholders, 30 members, or subscribers, to past and prospective expenses both countrywide and those 31 specially applicable to this state, and to all other relevant factors inside and outside this

01 state; 02  (3) the systems of expense provisions included in the rates for use by 03 an insurer or group of insurers may differ from those of other insurers or group of 04 insurers to reflect the requirements of the operating methods of the insurer or group 05 of insurers with respect to any kind of insurance, or with respect to a subdivision or 06 combination of them [THEREOF] for which subdivision or combination separate 07 expense provisions are applicable; 08  (4) risks may be grouped by classifications for the establishment of 09 rates and minimum premiums; classification rates may be modified to produce rates 10 for individual risks in accordance with rating plans that establish standards for 11 measuring variations in hazards or expense provisions, or both; the standards may 12 measure any differences among risks that can be demonstrated to have a probable 13 effect upon losses or expenses; 14  (5) in the case of fire insurance rates, consideration may be given to 15 the experience of the fire insurance business during a period of not more than the most 16 recent five-year period for which experience is available; 17  (6) when there is an established program to inspect new and existing 18 dwellings and the program has been certified by the director as likely to reduce the 19 incidence of fires in inspected dwellings, then in any rate plan used in this state, 20 dwellings that have been found by the inspection to meet the standards established by 21 the program shall have credits applied to the rate in amounts approved by the director; 22  (7) in the case of disability insurance rates, rates shall be made on 23 a statewide basis; rates may vary depending on age and family status. 24 * Sec. 5. AS 21.54 is amended by adding a new section to read: 25  Sec. 21.54.025. CLAIMS PROCESSING. (a) An insurer authorized to 26 transact disability insurance in the state shall 27  (1) pay each claim within 15 business days after a claim is received or, 28 within that same time period, give the person that submitted the claim notice that the 29 claim is denied; and 30  (2) adopt a claims grievance procedure and submit the procedure to the 31 division for approval; after the procedure has been approved, the insurer shall follow

01 the procedure. 02  (b) If a claim form is fully completed and an insurer fails to pay a claim or 03 give notice that the claim is denied within the time specified in (a) of this section, the 04 insurer shall pay interest at the rate specified in AS 45.45.010, from the 16th business 05 day after the claim was received until paid, on the amount finally determined to be 06 due. 07  (c) If an insurer denies a claim, the notice that the claim is denied must 08 include a statement of the reason for the denial. The statement must be sufficiently 09 clear to allow the provider to understand the reason for the denial and to take 10 corrective action, including resubmission of the claim, if appropriate. 11 * Sec. 6. AS 21 is amended by adding a new chapter to read: 12 CHAPTER 58. ALASKA HEALTH INSURANCE CORPORATION. 13  Sec. 21.58.010. CREATION AND PURPOSE. (a) The Alaska Health 14 Insurance Corporation is established. The corporation is a public corporation and an 15 instrumentality of the state in the Department of Commerce and Economic 16 Development but has a legal existence independent of and separate from the state. The 17 exercise by the corporation of the powers conferred by this chapter is considered an 18 essential function of the state. 19  (b) The purposes of the corporation are to establish and provide uniform health 20 insurance coverage for all residents of the state and to monitor and control all health 21 care expenditures in the state. 22  Sec. 21.58.020. BOARD OF DIRECTORS. The corporation is managed by 23 a board of seven directors. 24  Sec. 21.58.030. APPOINTMENT AND REMOVAL OF DIRECTORS. (a) 25 The directors of the corporation are appointed by the governor, subject to confirmation 26 by the legislature. A director may be removed only for good cause. 27  (b) In appointing directors to the board, the governor shall ensure that 28  (1) a majority of the board are experts in health care issues and fairly 29 represent the interests of the general public in having access to quality and affordable 30 health care; 31  (2) the interests of consumers and health care providers are fairly

01 represented; 02  (3) the director is a resident of the state; and 03  (4) the board has a gender and geographic composition that 04 approximates the population of the state. 05  Sec. 21.58.040. TERM OF SERVICE. The term of a director is four years. 06 Terms of directors shall be staggered. A director may be appointed to successive 07 terms. A director appointed to fill a vacancy serves for the unexpired term of the 08 director. A term shall be measured from January 1 of the year in which the term of 09 the vacant position begins, regardless of when the vacancy is filled. 10  Sec. 21.58.050. COMPENSATION AND EXPENSES. A director is entitled 11 to receive compensation at the rate of $400 for each day spent in performing duties 12 as a board member and to travel and per diem expenses authorized by law for boards 13 and commissions under AS 39.20.180. 14  Sec. 21.58.060. OFFICERS. At the first meeting of each year, the board of 15 the corporation shall elect a chair and a vice-chair from among its members. The 16 corporation shall prescribe their duties by regulation. 17  Sec. 21.58.070. MEETINGS AND QUORUM. The board of the corporation 18 shall meet at least once every three months. Four members of the board constitute a 19 quorum for the transaction of business and the exercise of the powers and duties of the 20 corporation. 21  Sec. 21.58.080. ADMINISTRATIVE PROCEDURE. Actions of the 22 corporation under this chapter are subject to AS 44.62 (Administrative Procedure Act). 23  Sec. 21.58.090. STAFF AND PROFESSIONAL SERVICES CONTRACTS. 24 The corporation shall employ an executive director who serves at the pleasure of the 25 corporation as its chief administrative officer. The executive director may, with the 26 approval of the corporation, select and employ additional staff as necessary. The 27 executive director is in the exempt service under AS 39.25.110. Employees of the 28 corporation other than the executive director are in the classified service under 29 AS 39.25.100. In addition to its staff of regular employees, the corporation may 30 contract for the services of consultants and professional, technical, and financial 31 advisors the corporation considers necessary for the purpose of developing information,

01 conducting hearings, studies, investigations, or other proceedings, or otherwise 02 exercising its powers. 03  Sec. 21.58.100. GENERAL POWERS. The corporation may 04  (1) exercise the powers granted to insurers under the laws of the state 05 when allowed under AS 21.58.130(c); if the corporation acts as an insurer, the 06 corporation shall comply with the requirements applicable to insurers under this title; 07  (2) sue or be sued; 08  (3) make contracts and execute all instruments necessary or convenient 09 for carrying out its business; 10  (4) establish administrative or accounting procedures; 11  (5) acquire, own, hold, dispose of, and encumber personal property and 12 lease real property in the exercise of its powers; 13  (6) establish appropriate levels of reserves to cover expenses of the 14 corporation; 15  (7) perform all other acts necessary and proper to carry out the duties 16 of the corporation. 17  Sec. 21.58.110. DUTIES. The corporation shall 18  (1) adopt regulations to implement this chapter; 19  (2) create and implement the formal public involvement process 20 required under AS 21.58.320, for the purpose of gathering broad input on the state 21 health insurance plan, options for financing the cost of coverage, cost-sharing of the 22 health insurance plan, and the cost of plan administration; 23  (3) establish the comprehensive health care data system required under 24 AS 21.58.260; 25  (4) create and implement a uniform claims form; 26  (5) develop and update the public health improvement plan for the state 27 required under AS 21.58.310; 28  (6) establish the claims clearinghouse required under AS 21.58.220; 29  (7) develop a benefits package of health care services that enrollees in 30 the state health insurance plan are entitled to receive and determine the eligibility 31 requirements for enrollment;

01  (8) annually determine the appropriate fee to be paid by an enrollee, 02 after considering the enrollee's income, assets, financial obligations, or other criteria, 03 as determined by the corporation; 04  (9) define acceptable reasons for denial of claims under the state health 05 insurance plan; 06  (10) at least annually, review the health care benefits package and 07 revise it as determined by the corporation, taking into consideration the health needs 08 of the state, available funding, and other relevant factors as determined by the 09 corporation; 10  (11) establish the cost control system required under AS 21.58.180, 11 21.58.230, 21.58.250, 21.58.270, 21.58.290, and 21.58.330, and the voluntary cost 12 control system required under AS 21.58.240 and 21.58.280; 13  (12) periodically review options to finance the state health insurance 14 plan and present options to the legislature; 15  (13) with funds from the state health fund, provide or procure coverage 16 required under the state health insurance plan; as provided under AS 21.58.130, the 17 corporation may act as an insurer or procure coverage from one or more companies 18 licensed to transact health insurance in the state for all persons who are eligible to be 19 enrollees of the state health insurance plan; 20  (14) pursue necessary federal waivers from applicable federal law or 21 other federal health care payers in order to incorporate both claims data and revenue 22 streams into the corporation's data system and additional revenue into the state health 23 insurance fund; 24  (15) implement the state health insurance plan as a market based single 25 payer system; 26  (16) design a program to give incentives to primary care providers to 27 practice in the state, especially in rural and under served areas of the state; incentives 28 may include added premiums on prices for primary care providers, a student loan 29 forgiveness program, an in-state family practice residency program, training and 30 rotations for midlevel practitioners, and other appropriate incentives; 31  (17) impose a mandatory cost control system in part or overall if the

01 corporation determines that the voluntary cost control system described under 02 AS 21.58.280 has failed to substantially achieve the adopted expenditure target; 03  (18) establish committees of experts and others as needed to make 04 recommendations to the corporation regarding how to contain the cost of health care, 05 including incorporating a greater emphasis on healthful lifestyles, prevention of disease 06 and injury, promoting effective medical treatments, identifying the optimal provider 07 mix within the state, or other matters determined by the corporation; 08  (19) develop a plan that comprehensively addresses the needs of 09 residents of the state for long-term care; and 10  (20) hold public meetings and annually report to enrollees, the 11 governor, and the legislature. 12  Sec. 21.58.120. HEALTH INSURANCE FUND. The state health insurance 13 fund is established as a separate account in the general fund. The fund shall be 14 administered by the corporation and used to provide or to purchase insurance under 15 AS 21.58.110 or 21.58.130. The fund consists of appropriations by the legislature, 16 individual or employer contributions, and private or government grants. 17  Sec. 21.58.130. PROCUREMENT OR PROVISION OF INSURANCE. (a) 18 The corporation shall 19  (1) solicit proposals from insurance companies that are licensed to 20 transact health insurance in the state under the procurement procedures adopted by the 21 corporation under AS 36.30.015(e); and 22  (2) if the corporation does not act as an insurer as provided under (c) 23 of this section, select one or more companies with which it will contract to provide 24 insurance, after considering the cost of the insurance, the availability from the 25 company of program features directed at reducing the cost of providing health care 26 services, and other relevant factors as determined by the corporation. 27  (b) The corporation may contract for insurance coverage for enrollees for a 28 term that it considers to be the most advantageous to the corporation and its enrollees, 29 for a period not exceeding three years. 30  (c) If, after the proposal process under (a) of this section has been completed, 31 the corporation determines that the desired coverage or benefits are not available from

01 insurers licensed in this state or the corporation can provide the desired coverage and 02 benefits at a lower cost per eligible person, the corporation may act as an insurer. 03  Sec. 21.58.140. ENROLLEES. (a) A person is eligible to be an enrollee in 04 the state health insurance plan under this chapter in a given year if the person is a 05 resident of the state and has complied with the procedures established by the 06 corporation under (d) of this section. For purposes of enrollment, the corporation shall 07 by regulation define residency in a manner that is consistent with AS 01.10.055 and 08 with this chapter. 09  (b) A person who is eligible to be an enrollee shall be enrolled by the 10 corporation in the state health insurance plan. 11  (c) The corporation shall cancel an enrollee's coverage if, during the fiscal 12 year, the enrollee becomes ineligible to be an enrollee. 13  (d) The corporation shall establish by regulation appropriate procedures for 14 processing applications for enrollment, for determining the eligibility of enrollees, for 15 enrolling enrollees, for determining and collecting the applicable fees, for canceling 16 an enrollee's coverage, and for processing appeals by enrollees of adverse decisions 17 by the corporation regarding eligibility, enrollment, determination or collection of 18 applicable fees, or cancellation of coverage. 19  Sec. 21.58.150. DISCRIMINATION AGAINST ENROLLEES PROHIBITED. 20 A health care provider may not discriminate against an enrollee with respect to the 21 availability, cost, or quality of health care services wholly or in part on the basis of 22 the person's status as an enrollee. 23  Sec. 21.58.160. CONFIDENTIALITY OF ENROLLEE INFORMATION. 24 Medical and financial information regarding applicants or current or former enrollees 25 is confidential and is not subject to public disclosure. The corporation by regulation 26 may establish reasonable standards for the release of limited information in specified 27 circumstances, including the release of reasonably necessary information to insurance 28 companies and the release of information with the written authorization of the 29 applicant or enrollee. 30  Sec. 21.58.170. HEALTH INSURANCE PLAN. (a) The corporation shall 31 adopt regulations specifying the health care services required to be covered by the state

01 health insurance plan, taking into consideration the services requested by the public, 02 the needs and characteristics unique to state residents, the goal of prevention of illness 03 and promotion of wellness, the cost of providing the benefits package, the cost of 04 providing or procuring the insurance coverage, and the funds available in the state 05 health insurance fund. 06  (b) The corporation shall conduct a comprehensive public involvement process 07 designed to solicit information and opinions regarding the services required to be 08 covered under (a) of this section. 09  Sec. 21.58.180. DEDUCTIBLES AND COPAYMENTS. Subject to 10 AS 21.58.170, the corporation shall establish the deductible and copayment amounts 11 applicable under the state health insurance plan. 12  Sec. 21.58.190. PREMIUMS. A premium may be charged to an enrollee for 13 coverage as established by the corporation by regulation. In establishing a premium, 14 the corporation shall establish a standard fee and a sliding scale fee and shall consider 15 the cost of coverage, funding available, and other factors the corporation determines 16 are relevant. 17  Sec. 21.58.200. PROHIBITED DISCRIMINATION BETWEEN HEALTH 18 CARE PROVIDERS. The corporation may not discriminate between health care 19 providers who are licensed to perform a covered health care service unless the type of 20 health care service provided is not included under the state health insurance plan. 21  Sec. 21.58.210. SOLICITATION OF ELIGIBLE PERSONS. (a) The 22 corporation, under a plan approved by the director, shall disseminate appropriate 23 information to the residents of the state regarding the existence of the state health 24 insurance plan and the means of enrollment. 25  (b) The corporation shall devise and implement a means of maintaining public 26 awareness of the provisions of this chapter regarding the state health insurance plan 27 and shall administer this chapter in a manner that facilitates public participation in the 28 state health insurance plan. 29  Sec. 21.58.220. CLAIMS CLEARINGHOUSE. (a) The corporation shall 30 establish a claims clearinghouse in the state. A provider of health care services shall 31 submit all claims for payment under the state health insurance plan to the claims

01 clearinghouse. The corporation may, by regulation, require providers to submit 02 specified additional information pertaining to providing health care services in the state 03 to the claims clearinghouse. 04  (b) Subject to appropriation, the claims clearinghouse shall pay claims 05 approved for payment by the corporation under the state health insurance plan. 06  (c) The claims clearinghouse shall comply with the provisions of 07 AS 21.54.025, except that the claims grievance procedure required by 08 AS 21.54.025(a)(2) shall be submitted to the board of directors of the corporation for 09 approval. 10  (d) The claims clearinghouse may deny a claim only for a reason that has been 11 specified as an acceptable reason by the corporation under AS 21.58.110(9). 12  Sec. 21.58.230. REQUIRED AVAILABILITY OF PRICE LIST. (a) A health 13 care provider shall prepare a list of the provider's prices that includes the dates during 14 which the prices will be applicable. The price list shall be made available either by 15 posting the price list in a conspicuous location in the health care provider's office or 16 by similarly posting a notice that the price list is available for review upon request. 17 The corporation shall determine by regulation the contents of the price list required 18 under this section. 19  (b) At least annually, a health care provider shall submit to the corporation 20 copies of the provider's current price list. The corporation shall specify by regulation 21 the date for submitting the price lists. 22  Sec. 21.58.240. INFORMATION ON PRICES FOR HEALTH CARE 23 SERVICES. The corporation shall at least annually publish a description of types of 24 health care providers licensed to provide covered services and a comparative list of 25 provider prices. The corporation shall make the publications available to the public 26 upon request. 27  Sec. 21.58.250. COMPARATIVE LISTS OF PRICES. (a) At least annually, 28 the corporation shall compile comparative lists of prices for commonly provided health 29 care services based on abstracted data provided by the claims clearinghouse under 30 AS 21.58.220, on the price lists submitted to the corporation under AS 21.58.230, and 31 on other relevant information as determined by the corporation.

01  (b) The lists required under this section shall be prepared to allow 02 identification and comparison of prices made by individual providers for the listed 03 services. Hospital services may be compared on the basis of diagnosis related groups. 04  Sec. 21.58.260. HEALTH CARE DATA SYSTEM. (a) The corporation shall 05 develop and periodically update a health care data system. To the extent practicable, 06 the data system base year shall be calendar year 1993 and the system must include 07  (1) health care expenditures, including capital expenditures associated 08 with receiving health care; 09  (2) demographic data; 10  (3) clinical information, including patient diagnosis, type of provider, 11 type of service, location and length of care, referral patterns, quality of care, and result 12 of care; 13  (4) billing and payment data; and 14  (5) public health data, including vital statistics and health status. 15  (b) The corporation may, by regulation, require health care providers, including 16 providers not being reimbursed by the corporation, to submit claims data and 17 additional information necessary to develop or update the data system required under 18 (a) of this section. 19  Sec. 21.58.270. STATEWIDE HEALTH CARE EXPENDITURE TARGET. 20 (a) The corporation shall prescribe by regulation a statewide health care expenditure 21 target, based on the data obtained under AS 21.58.260. To the extent practicable, the 22 base year for the statewide health care expenditure target shall be calendar year 1993. 23  (b) The corporation annually shall adjust the health care expenditure target 24 established under this section to reflect changes in the Consumer Price Index and the 25 following factors: 26  (1) changes in the size and demographic characteristics of the state's 27 population including aging; 28  (2) changes in medical technology; 29  (3) changes that improve access to health care services; 30  (4) changes in the burden of disease resulting from epidemics, disasters, 31 and reduction or elimination of disease;

01  (5) elimination of unnecessary care; 02  (6) changes in costs associated with professional liability insurance; 03  (7) changes in administrative costs; 04  (8) changes in patterns of utilization. 05  Sec. 21.58.280. VOLUNTARY HEALTH CARE PROVIDER COMPLIANCE. 06 The health care expenditure target adopted by the corporation under AS 21.58.270 07 shall constitute a recommended target for expenditures within each specified category 08 or subcategory of health care services or products. Health care providers may 09 voluntarily comply with the expenditure target and may take all appropriate steps not 10 prohibited by law to attempt to ensure that annual expenditures for health care in the 11 state do not exceed the expenditure target adopted by the corporation. 12  Sec. 21.58.290. REVIEW AND REPORT ON HEALTH CARE 13 EXPENDITURES. The corporation shall annually review and report to the legislature 14 and the governor on 15  (1) the total amount of health care expenditures in the state; 16  (2) the amount of increase or decrease in health care and capital 17 medical expenditures in the state; 18  (3) changes in health care provider prices; 19  (4) changes in patterns of utilization or expenditures; and 20  (5) factors that are responsible for changes in patterns of utilization or 21 expenditures. 22  Sec. 21.58.300. MANDATORY HEALTH CARE PROVIDER COMPLIANCE. 23 (a) Based on the data compiled under AS 21.58.260, the corporation shall monitor the 24 success of voluntary compliance under AS 21.58.280. At any time beginning three 25 years after the voluntary expenditure target has been in effect, if the corporation 26 concludes that voluntary compliance has failed substantially to achieve the adopted 27 expenditure target, the corporation shall impose by regulation a mandatory expenditure 28 limit as provided under (b) of this section. 29  (b) The corporation may, by regulation, 30  (1) impose a mandatory expenditure limit on one or more subcategories 31 or on specific items within the expenditure limit;

01  (2) directly assume all or part of the cost control functions specified 02 under AS 21.58.110(11); 03  (3) establish mandatory price and utilization controls or guidelines; 04  (4) annually monitor health care expenditures, patterns of utilization, 05 and factors contributing to changes in expenditures or utilization; 06  (5) establish cost sharing recommendations relevant to the mandatory 07 expenditure limit. 08  (c) A health care provider shall comply with the mandatory cost control 09 provisions that may be established by the corporation under (a) and (b) of this section. 10 An enrollee who receives a charge that does not comply with the mandatory cost 11 control provisions that are imposed under this section is not required to pay the portion 12 of the charge that exceeds the mandatory cost control provisions. A health care 13 provider shall refund an amount received that exceeds the mandatory cost control 14 provisions. 15  (d) The corporation shall establish by regulation procedures for monitoring 16 compliance with the mandatory cost control provisions and for providing notice to a 17 person who is determined to have been overcharged. 18  Sec. 21.58.310. PUBLIC HEALTH IMPROVEMENT PLAN. (a) The 19 corporation shall develop and annually update a public health improvement plan for 20 the state. The plan required under this section must recognize the need for 21  (1) community involvement in health care planning and delivery; 22  (2) attention to local needs that may vary from place to place; 23  (3) accountability for the use of public funds; 24  (4) equity and stability in the distribution of public funds; 25  (5) shared responsibility of all levels of government for administering 26 and financing public health care delivery; and 27  (6) coordination of basic public health services. 28  (b) The plan required under this section must include 29  (1) an analysis of the health status of the residents of the state; 30  (2) an assessment of the most appropriate role for various levels of 31 government to play in addressing the health care needs of the residents of the state;

01  (3) a delineation of the standards that should be used in performing 02 assessment, policy development, and quality assurance in the delivery of public health 03 services; 04  (4) documentation of the extent to which the current public health 05 system implements or achieves the standards identified under (3) of this subsection; 06  (5) identification of interjurisdictional issues involved in health care 07 access and delivery; 08  (6) recommendations, including recommendations for specific 09 legislative action when necessary, pertaining to the following: 10  (A) strategies, time lines, financial needs, and specific sources 11 of stable revenue for bringing the state public health care system up to 12 standards identified by the corporation; 13  (B) appropriate sharing of the responsibility of local, regional, 14 state, and federal government entities to deliver public health care services 15 efficiently and effectively, including recommendations for organization within 16 state government; 17  (C) integration of the public health care system with state and 18 national health care reform efforts; 19  (D) the corporation's estimate of the optimal share that public 20 health should represent in the total health care delivery system of the state, 21 expressed in terms of a percentage of health care expenditures in the state. 22  Sec. 21.58.320. REQUIRED PUBLIC INVOLVEMENT PROCESS. The 23 corporation shall design, implement, and maintain an extensive community based 24 public involvement process for the purpose of providing residents with an ongoing 25 opportunity to participate in decisions made by the corporation's board of directors 26 regarding 27  (1) health care services residents want included in the benefit package; 28  (2) financing options; 29  (3) revenue sources that should be used to finance the health plan; 30  (4) cost-sharing options; and 31  (5) administration of the health care plan.

01  Sec. 21.58.330. PEER REVIEW OF UTILIZATION AND QUALITY. The 02 corporation shall contract with health care providers in the state to develop utilization 03 and quality controls. The contract must include the use of peer specialty groups that 04 are given the goal of controlling utilization within a specialty. The corporation shall 05 ensure that the contract stresses the development of the use of incentives to control 06 costs. 07  Sec. 21.58.400. DEFINITIONS. In this chapter, 08  (1) "clearinghouse" means the claims clearinghouse designated by the 09 corporation under AS 21.58.220; 10  (2) "Consumer Price Index" means the Consumer Price Index for 11 Anchorage, All Items Index, compiled by the Bureau of Labor Statistics, United States 12 Department of Labor; 13  (3) "corporation" means the Alaska Health Insurance Corporation 14 established in AS 21.58.010; 15  (4) "enrollee" means a person whose application for coverage under the 16 state health insurance plan has been accepted by the corporation, who has completed 17 applicable enrollment procedures, who is covered by insurance under the program; 18  (5) "health care provider" means an acupuncturist licensed under 19 AS 08.06; an audiologist licensed under AS 08.11; a chiropractor licensed under 20 AS 08.20; a dental hygienist licensed under AS 08.32; a dentist licensed under 21 AS 08.36; a nurse licensed under AS 08.68; a dispensing optician licensed under 22 AS 08.71; a naturopath licensed under AS 08.45; an optometrist licensed under 23 AS 08.72; a pharmacist licensed under AS 08.80; a physical therapist or occupational 24 therapist licensed under AS 08.84; a physician licensed under AS 08.64; a podiatrist; 25 a psychologist and a psychological associate licensed under AS 08.86; a hospital as 26 defined in AS 18.20.130, including a governmentally owned or operated hospital; and 27 an employee of a health care provider acting within the course and scope of 28 employment; 29  (6) "health care services" means preventive, diagnostic, medical, 30 surgical, reproductive, psychiatric, psychologic, rehabilitative, health maintenance, 31 dental, podiatric, optometric, optical, audiologic, nutritive, and chiropractic care;

01 prescription drugs, laboratory and radiologic services, medical supplies, durable 02 medical equipment and devices; personal assistance services; inpatient and outpatient 03 care; home health care; hospice care; and long-term or institutional care; 04  (7) "health insurance" means an individual or group contract or other 05 plan providing coverage of health care services that is issued by the corporation or by 06 a health insurance company, a hospital service corporation, a medical service 07 corporation, or a health maintenance organization; "health insurance" includes disability 08 insurance under AS 21.12.050; 09  (8) "health insurance company" means an insurer that is authorized to 10 transact health insurance; 11  (9) "market based single payer system" means a system in which a 12 single entity provides health insurance to all residents of the state and the insurance 13 is based on market forces, including provider defined fees, defined patient copayments, 14 sliding scale copayments for the indigent, provider fees that are posted or made 15 otherwise available at the point of services, published or disseminated fees in 16 comparative lists that allow fee comparison by consumers, voluntary expenditure 17 targets, provider peer review and control of volume, utilization, and quality of health 18 services, and a regularly published description of the various types of providers 19 licensed to provide services in the benefit package; 20  (10) "state health insurance fund" is the fund established in 21 AS 21.58.120. 22 * Sec. 7. AS 24.20.206 is amended to read: 23  Sec. 24.20.206. DUTIES. The Legislative Budget and Audit Committee shall 24  (1) report to the legislature its recommendations relating to the 25 confirmation of appointees to the Board of Trustees of the Alaska Permanent Fund 26 Corporation; 27  (2) annually review the long-range operating plans of all agencies of 28 the state which perform lending or investment functions; 29  (3) review periodic reports from all agencies of the state which perform 30 lending or investment functions; 31  (4) present a complete report of investment programs, plans,

01 performance, and policies of all agencies of the state which perform lending or 02 investment functions to the legislature within 30 days after the convening of each 03 regular session; 04  (5) present to the legislature within 30 days after the convening of each 05 regular session a review of the report of the governor under AS 37.07.020(d) with 06 recommendations for needed legislation; 07  (6) in conjunction with the finance committee of each house 08 recommend annually to the legislature the investment policy for the general fund 09 surplus and for the income from the permanent fund; 10  (7) provide for an annual post audit and annual operational and 11 performance evaluation of the Alaska Permanent Fund Corporation investments and 12 investment programs; 13  (8) provide for an annual operational and performance evaluation of the 14 Alaska Housing Finance Corporation and the Alaska Industrial Development and 15 Export Authority; the performance evaluation shall include, but is not limited to, a 16 comparison of the effect on various sectors of the economy by public and private 17 lending, the effect on resident and nonresident employment, the effect on real wages, 18 and the effect on state and local operating and capital budgets of the programs of the 19 Alaska Housing Finance Corporation and the Alaska Industrial Development and 20 Export Authority; 21  (9) provide assistance to the trustees of the trust established in 22 AS 37.14.400 - 37.14.450 in carrying out their duties under AS 37.14.415; 23  (10) provide for an annual post audit and annual operational and 24 performance evaluation of the Alaska Health Insurance Corporation. 25 * Sec. 8. AS 36.30.015(e) is amended to read: 26  (e) The board of directors of the Alaska Railroad Corporation, [AND] the 27 board of directors of the Alaska Aerospace Development Corporation, and the board 28 of directors of the Alaska Health Insurance Corporation shall adopt procedures to 29 govern the procurement of supplies, services, professional services, and construction. 30 The procedures must be substantially equivalent to the procedures prescribed in this 31 chapter and in regulations adopted under this chapter.

01 * Sec. 9. AS 37.07.030 is amended to read: 02  Sec. 37.07.030. RESPONSIBILITIES OF THE LEGISLATURE. The 03 legislature shall 04  (1) provide for a budget review function; 05  (2) analyze the comprehensive operating and capital improvements 06 programs and financial plans recommended by the governor; 07  (3) adopt legislation to authorize implementation of the governor's 08 comprehensive operating and capital improvements programs and financial plans or 09 appropriate alternatives to those plans; 10  (4) provide for a post-audit function to cover financial transactions, 11 program accomplishment, and compliance with legislative intent; 12  (5) adopt or revise the estimate of receipts required to balance the 13 succeeding fiscal year's budget in order that proposed expenditures do not exceed 14 estimated receipts for that fiscal year; 15  (6) adopt, revise, or initiate revenue measures in order to balance the 16 succeeding fiscal year's budget and the capital improvements section of the budget for 17 the succeeding six years; 18  (7) appropriate funds for the operation of the Alaska Health 19 Insurance Corporation. 20 * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read: 21  (30) the executive director of the Alaska Health Insurance Corporation. 22 * Sec. 11. AS 44.62.330(a) is amended by adding a new paragraph to read: 23  (59) Alaska Health Insurance Corporation. 24 * Sec. 12. PHASED TRANSITION PERIOD. Notwithstanding the provisions of AS 21.58, 25 the Alaska Health Insurance Corporation shall implement the provisions of AS 21.58 on an 26 orderly and gradual basis as follows: 27 (1) by December 31, 1994, the corporation shall begin to implement the public 28 involvement process required under AS 21.58.320, establish the data system required under 29 AS 21.58.260 and begin collecting data, begin the first public health improvement plan 30 required under AS 21.58.310, determine the federal waivers necessary to implement AS 21.58, 31 and begin to develop incentives to attract health care providers required under

01 AS 21.58.110(16); 02 (2) by June 31, 1995, the corporation shall complete the uniform claims form 03 required under AS 21.58.110(4); 04 (3) by December 31, 1995, the corporation shall establish the claims 05 clearinghouse required under AS 21.58.220, determine the health care services required under 06 AS 21.58.170, begin monitoring health care expenditures and utilization patterns, and begin 07 collecting fee information required under AS 21.58.230; 08 (4) by January 1, 1996, the corporation shall implement the peer review system 09 for utilization and quality required under AS 21.58.330 and shall adopt regulations that 10 establish eligibility criteria for enrollment in the state health insurance plan, including a 11 definition of the term "resident" that is consistent with AS 01.10.055 and the purposes of this 12 Act; 13 (5) by December 31, 1996, the corporation shall establish the voluntary cost 14 control system required under AS 21.58.280; 15 (6) by January 1, 1997, the corporation shall develop a long-term health care 16 plan required under AS 21.58.110(19), and establish the deductible and copayment amounts 17 required under AS 21.58.180 and present options to the governor and the legislature on how 18 to finance a state health insurance plan under a market based single payer system; in 19 considering options on financing a state health insurance plan the corporation shall strive to 20 structure the options in a manner that provides protection for benefits provided to retired 21 employees through public or private retirement systems; 22 (7) by January 1, 1998, the corporation shall establish the statewide health care 23 expenditure target required under AS 21.58.270, and, subject to appropriation, begin to provide 24 health insurance coverage for state residents as required under AS 21.58. 25 * Sec. 13. Notwithstanding AS 21.58.270(b), enacted in sec. 6 of this Act, the corporation 26 shall increase the health care expenditure target by the following percentages of the target 27 established under AS 21.58.270: 28 (1) in 1998, 1.5 percent; 29 (2) in 1999, 1.0 percent; and 30 (3) in 2000, 0.5 percent. 31 * Sec. 14. This Act takes effect July 1, 1994.