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SB 248: "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."

00SENATE BILL NO. 248 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- 07 regulation regarding fees and 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- 10 regulation fails to 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, and preserve the individual's choice of health care 22 provider; 23 (8) a market based single payer system is preferable to a managed care system 24 because managed care creates inherent conflicts between the goals of profitability and quality 25 patient care, restricts access to health care providers, provides no relief for uninsured residents, 26 and creates an expensive health care bureaucracy that is responsible for limiting health care 27 services; 28 (9) because the state constitution's single subject rule precludes the 29 consideration of comprehensive tort reform in the same legislative enactment as health care 30 reform, tort reform should be addressed in a separate legislative enactment; 31 (10) a market based single payer system is preferable to either an employer

01 mandate or a "pay or play" approach because 02 (A) both of the employer mandate approaches are based on the current 03 mix of public, employer, and individual financing that inevitably creates coverage gaps 04 for some people, particularly when their employment status changes; 05 (B) health care financing approaches that require all businesses to 06 provide health care benefits or that levy additional taxes on those businesses threaten 07 the economic viability of many small businesses in the state; 08 (C) multiple payer systems would not necessarily address the problems 09 of cost shifting that exist in our current system; and 10 (D) systems that are built upon the existing public and private financing 11 arrangements can be expected to inherit the inefficiencies in those arrangements. 12 (b) The purpose of this Act is to 13 (1) increase access to health care by containing the rate of increase of health 14 care expenditures and by making health insurance available to the people in the state; 15 (2) create a market based single payer state health insurance system that 16 provides health insurance to all residents of the state, that utilizes market forces to make 17 consumers more aware of the actual costs of health services, and that provides consumers with 18 information enabling them to make more informed purchasing decisions; 19 (3) provide a structure for addressing the health care needs of the state 20 including 21 (A) developing a comprehensive long-term care plan that integrates 22 support services and that promotes human dignity; 23 (B) use of preventive and wellness programs to reduce health care 24 costs; and 25 (C) the different health care needs of urban and rural areas of the state. 26 (c) It is not the purpose of this Act to change the existing agreements between 27 employers and employees, including retirees, in a manner that would diminish health care 28 benefits. 29 * Sec. 2. AS 08.02 is amended by adding a new section to read: 30 Sec. 08.02.035. COMPLIANCE WITH REQUIREMENTS OF STATE 31 HEALTH INSURANCE CORPORATION. A health care provider shall comply with

01 the required price list availability provisions of AS 21.58.230 and the health care data 02 system provisions of AS 21.58.260 that are applicable to health care providers 03 including regulations adopted by the Alaska Health Insurance Corporation under those 04 provisions. Notwithstanding another provision of law, the license of a health care 05 provider is not valid unless the health care provider complies with this section. In this 06 section, "health care provider" has the meaning given in AS 21.58.400. 07 * Sec. 3. AS 21.39.020 is amended to read: 08 Sec. 21.39.020. APPLICABILITY. (a) This chapter applies to disability 09 insurance, to all forms of casualty insurance, including fidelity, surety, and guaranty 10 bonds, to all forms of fire, marine, and inland marine insurance, and to a combination 11 of any of them, or risks or operations in this state. Inland marine insurance includes 12 insurance defined by statute, or by interpretation of statute, or if not defined or 13 interpreted, by ruling of the director, or as established by general custom of the 14 business, as inland marine insurance. 15 (b) This chapter does not apply to 16 (1) reinsurance, other than joint reinsurance to the extent stated in 17 AS 21.39.110; 18 (2) [DISABILITY INSURANCE; 19 (3)] insurance of vessels or craft, their cargoes, marine builders' risks, 20 marine protection and indemnity, or other risks commonly insured under marine, as 21 distinguished from inland marine insurance policies; 22 (3) [(4)] insurance against loss of or damage to aircraft or against 23 liability, other than workers' compensation and employer's liability, arising out of the 24 ownership, maintenance, or use of aircraft; or, to insurance of hulls of aircraft, 25 including their accessories and equipment. 26 * Sec. 4. AS 21.39.030(a) is amended to read: 27 (a) Rates shall be made in accordance with the following provisions: 28 (1) rates may [SHALL] not be excessive, inadequate, or unfairly 29 discriminatory; 30 (2) consideration shall be given to past and prospective loss experience 31 inside and outside this state, to the conflagration and catastrophe hazards, to a

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

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

01 (1) a majority of the board are experts in health care issues and fairly 02 represent the interests of the general public in having access to quality and affordable 03 health care; 04 (2) the interests of consumers and health care providers are fairly 05 represented; 06 (3) the director is a resident of the state; and 07 (4) the board has a gender and geographic composition that 08 approximates the population of the state. 09 Sec. 21.58.040. TERM OF SERVICE. The term of a director is four years. 10 Terms of directors shall be staggered. A director may be appointed to successive 11 terms. A director appointed to fill a vacancy serves for the unexpired term of the 12 director. A term shall be measured from January 1 of the year in which the term of 13 the vacant position begins, regardless of when the vacancy is filled. 14 Sec. 21.58.050. COMPENSATION AND EXPENSES. A director is entitled 15 to receive compensation at the rate of $400 for each day spent in performing duties 16 as a board member and to travel and per diem expenses authorized by law for boards 17 and commissions under AS 39.20.180. 18 Sec. 21.58.060. OFFICERS. At the first meeting of each year, the board of 19 the corporation shall elect a chair and a vice-chair from among its members. The 20 corporation shall prescribe their duties by regulation. 21 Sec. 21.58.070. MEETINGS AND QUORUM. The board of the corporation 22 shall meet at least once every three months. Four members of the board constitute a 23 quorum for the transaction of business and the exercise of the powers and duties of the 24 corporation. 25 Sec. 21.58.080. ADMINISTRATIVE PROCEDURE. Actions of the 26 corporation under this chapter are subject to AS 44.62 (Administrative Procedure Act). 27 Sec. 21.58.090. STAFF AND PROFESSIONAL SERVICES CONTRACTS. 28 The corporation shall employ an executive director who serves at the pleasure of the 29 corporation as its chief administrative officer. The executive director may, with the 30 approval of the corporation, select and employ additional staff as necessary. The 31 executive director is in the exempt service under AS 39.25.110. Employees of the

01 corporation other than the executive director are in the classified service under 02 AS 39.25.100. In addition to its staff of regular employees, the corporation may 03 contract for the services of consultants and professional, technical, and financial 04 advisors the corporation considers necessary for the purpose of developing information, 05 conducting hearings, studies, investigations, or other proceedings, or otherwise 06 exercising its powers. 07 Sec. 21.58.100. GENERAL POWERS. The corporation may 08 (1) exercise the powers granted to insurers under the laws of the state 09 when allowed under AS 21.58.130(c); if the corporation acts as an insurer, the 10 corporation shall comply with the requirements applicable to insurers under this title; 11 (2) sue or be sued; 12 (3) make contracts and execute all instruments necessary or convenient 13 for carrying out its business; 14 (4) establish administrative or accounting procedures; 15 (5) acquire, own, hold, dispose of, and encumber personal property and 16 lease real property in the exercise of its powers; 17 (6) establish appropriate levels of reserves to cover expenses of the 18 corporation; 19 (7) perform all other acts necessary and proper to carry out the duties 20 of the corporation. 21 Sec. 21.58.110. DUTIES. The corporation shall 22 (1) adopt regulations to implement this chapter; 23 (2) create and implement the formal public involvement process 24 required under AS 21.58.320, for the purpose of gathering broad input on the state 25 health insurance plan, options for financing the cost of coverage, cost-sharing of the 26 health insurance plan, and the cost of plan administration; 27 (3) establish the comprehensive health care data system required under 28 AS 21.58.260; 29 (4) monitor the use of uniform claims forms; 30 (5) develop and update the public health improvement plan for the state 31 required under AS 21.58.310;

01 (6) establish the claims clearinghouse required under AS 21.58.220; 02 (7) develop a benefits package of health care services that enrollees in 03 the state health insurance plan are entitled to receive and determine the eligibility 04 requirements for enrollment; 05 (8) annually determine the appropriate fee to be paid by an enrollee, 06 after considering the enrollee's income, assets, financial obligations, or other criteria, 07 as determined by the corporation; 08 (9) define acceptable reasons for denial of claims under the state health 09 insurance plan; 10 (10) at least annually, review the health care benefits package and 11 revise it as determined by the corporation, taking into consideration the health needs 12 of the state, available funding, and other relevant factors as determined by the 13 corporation; 14 (11) establish the cost control system required under AS 21.58.180, 15 21.58.230, 21.58.250, 21.58.270, 21.58.290, and 21.58.330, and the voluntary cost 16 control system required under AS 21.58.240 and 21.58.280; 17 (12) periodically review options to finance the state health insurance 18 plan and present options to the legislature; 19 (13) with funds from the state health fund, provide or procure coverage 20 required under the state health insurance plan; as provided under AS 21.58.130, the 21 corporation may act as an insurer or procure coverage from one or more companies 22 licensed to transact health insurance in the state for all persons who are eligible to be 23 enrollees of the state health insurance plan; 24 (14) pursue necessary federal waivers from applicable federal law or 25 other federal health care payers in order to incorporate both claims data and revenue 26 streams into the corporation's data system and additional revenue into the state health 27 insurance fund; 28 (15) implement the state health insurance plan as a market based single 29 payer system; 30 (16) design a program to give incentives to primary care providers to 31 practice in the state, especially in rural and under served areas of the state; incentives

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

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

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

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

01 the corporation shall compile comparative lists of prices for commonly provided health 02 care services based on abstracted data provided by the claims clearinghouse under 03 AS 21.58.220, on the price lists submitted to the corporation under AS 21.58.230, and 04 on other relevant information as determined by the corporation. 05 (b) The lists required under this section shall be prepared to allow 06 identification and comparison of prices made by individual providers for the listed 07 services. Hospital services may be compared on the basis of diagnosis related groups. 08 Sec. 21.58.260. HEALTH CARE DATA SYSTEM. (a) The corporation shall 09 develop and periodically update a health care data system. To the extent practicable, 10 the data system base year shall be calendar year 1995 and the system must include 11 (1) health care expenditures, including capital expenditures associated 12 with receiving health care; 13 (2) demographic data; 14 (3) clinical information, including patient diagnosis, type of provider, 15 type of service, location and length of care, referral patterns, quality of care, and result 16 of care; 17 (4) billing and payment data; and 18 (5) public health data, including vital statistics and health status. 19 (b) The corporation may, by regulation, require health care providers, including 20 providers not being reimbursed by the corporation, to submit claims data and 21 additional information necessary to develop or update the data system required under 22 (a) of this section. 23 Sec. 21.58.270. STATEWIDE HEALTH CARE EXPENDITURE TARGET. 24 (a) The corporation shall prescribe by regulation a statewide health care expenditure 25 target, based on the data obtained under AS 21.58.260. To the extent practicable, the 26 base year for the statewide health care expenditure target shall be calendar year 1995. 27 (b) The corporation annually shall adjust the health care expenditure target 28 established under this section to reflect changes in the Consumer Price Index and the 29 following factors: 30 (1) changes in the size and demographic characteristics of the state's 31 population including aging;

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

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

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

01 (2) financing options; 02 (3) revenue sources that should be used to finance the health plan; 03 (4) cost-sharing options; and 04 (5) administration of the health care plan. 05 Sec. 21.58.330. PEER REVIEW OF UTILIZATION AND QUALITY. The 06 corporation shall contract with health care providers in the state to develop utilization 07 and quality controls. The contract must include the use of peer specialty groups that 08 are given the goal of controlling utilization within a specialty. The corporation shall 09 ensure that the contract stresses the development of the use of incentives to control 10 costs. 11 Sec. 21.58.400. DEFINITIONS. In this chapter, 12 (1) "clearinghouse" means the claims clearinghouse designated by the 13 corporation under AS 21.58.220; 14 (2) "Consumer Price Index" means the Consumer Price Index for 15 Anchorage, All Items Index, compiled by the Bureau of Labor Statistics, United States 16 Department of Labor; 17 (3) "corporation" means the Alaska Health Insurance Corporation 18 established in AS 21.58.010; 19 (4) "enrollee" means a person whose application for coverage under the 20 state health insurance plan has been accepted by the corporation, who has completed 21 applicable enrollment procedures, who is covered by insurance under the program; 22 (5) "health care provider" means an acupuncturist licensed under 23 AS 08.06; an audiologist licensed under AS 08.11; a chiropractor licensed under 24 AS 08.20; a dental hygienist licensed under AS 08.32; a dentist licensed under 25 AS 08.36; a marital or family therapist licensed under AS 08.63; a direct-entry 26 midwife licensed under AS 08.65; a nurse licensed under AS 08.68; a dispensing 27 optician licensed under AS 08.71; a naturopath licensed under AS 08.45; an 28 optometrist licensed under AS 08.72; a pharmacist licensed under AS 08.80; a physical 29 therapist or occupational therapist licensed under AS 08.84; a physician's assistant 30 certified under AS 08.64; a physician licensed under AS 08.64; a podiatrist licensed 31 under AS 08.64; a psychologist and a psychological associate licensed under AS 08.86;

01 a clinical social worker licensed under AS 08.95; an emergency medical technician 02 certified under AS 18.08.082; a mobile intensive care paramedic trained as required 03 under AS 18.08.082; a hospital as defined in AS 18.20.130, including a governmentally 04 owned or operated hospital; and an employee of a health care provider acting within 05 the course and scope of employment; 06 (6) "health care services" means preventive, diagnostic, medical, 07 surgical, reproductive, psychiatric, psychologic, rehabilitative, health maintenance, 08 dental, podiatric, optometric, optical, audiologic, nutritive, and chiropractic care; 09 prescription drugs, laboratory and radiologic services, medical supplies, durable 10 medical equipment and devices; personal assistance services; inpatient and outpatient 11 care; home health care; hospice care; and long-term or institutional care; 12 (7) "health insurance" means an individual or group contract or other 13 plan providing coverage of health care services that is issued by the corporation or by 14 a health insurance company, a hospital service corporation, a medical service 15 corporation, or a health maintenance organization; "health insurance" includes disability 16 insurance under AS 21.12.050; 17 (8) "health insurance company" means an insurer that is authorized to 18 transact health insurance; 19 (9) "market based single payer system" means a system in which a 20 single entity provides health insurance to all residents of the state and the insurance 21 is based on market forces, including provider defined fees, defined patient copayments, 22 sliding scale copayments for the indigent, provider fees that are posted or made 23 otherwise available at the point of services, published or disseminated fees in 24 comparative lists that allow fee comparison by consumers, voluntary expenditure 25 targets, provider peer review and control of volume, utilization, and quality of health 26 services, and a regularly published description of the various types of providers 27 licensed to provide services in the benefit package; 28 (10) "state health insurance fund" is the fund established in 29 AS 21.58.120. 30 * Sec. 7. AS 24.20.206 is amended to read: 31 Sec. 24.20.206. DUTIES. The Legislative Budget and Audit Committee shall

01 (1) report to the legislature its recommendations relating to the 02 confirmation of appointees to the Board of Trustees of the Alaska Permanent Fund 03 Corporation; 04 (2) annually review the long-range operating plans of all agencies of 05 the state that perform lending or investment functions; 06 (3) review periodic reports from all agencies of the state that perform 07 lending or investment functions; 08 (4) prepare a complete report of investment programs, plans, 09 performance, and policies of all agencies of the state that perform lending or 10 investment functions and notify the legislature within 30 days after the convening of 11 each regular session that the report is available; 12 (5) in conjunction with the finance committee of each house 13 recommend annually to the legislature the investment policy for the general fund 14 surplus and for the income from the permanent fund; 15 (6) provide for an annual post audit and annual operational and 16 performance evaluation of the Alaska Permanent Fund Corporation investments and 17 investment programs; 18 (7) provide for an annual operational and performance evaluation of the 19 Alaska Housing Finance Corporation and the Alaska Industrial Development and 20 Export Authority; the performance evaluation must include, but is not limited to, a 21 comparison of the effect on various sectors of the economy by public and private 22 lending, the effect on resident and nonresident employment, the effect on real wages, 23 and the effect on state and local operating and capital budgets of the programs of the 24 Alaska Housing Finance Corporation and the Alaska Industrial Development and 25 Export Authority; 26 (8) provide assistance to the trustees of the trust established in 27 AS 37.14.400 - 37.14.450 in carrying out their duties under AS 37.14.415; 28 (9) provide for an annual post audit and annual operational and 29 performance evaluation of the Alaska Health Insurance Corporation. 30 * Sec. 8. AS 36.30.015(e) is amended to read: 31 (e) The board of directors of the Alaska Railroad Corporation, [AND] the

01 board of directors of the Alaska Aerospace Development Corporation, and the board 02 of directors of the Alaska Health Insurance Corporation shall adopt procedures to 03 govern the procurement of supplies, services, professional services, and construction. 04 The procedures must be substantially equivalent to the procedures prescribed in this 05 chapter and in regulations adopted under this chapter. 06 * Sec. 9. AS 37.07.030 is amended to read: 07 Sec. 37.07.030. RESPONSIBILITIES OF THE LEGISLATURE. The 08 legislature shall 09 (1) provide for a budget review function; 10 (2) analyze the comprehensive operating and capital improvements 11 programs and financial plans recommended by the governor; 12 (3) adopt legislation to authorize implementation of the governor's 13 comprehensive operating and capital improvements programs and financial plans or 14 appropriate alternatives to those plans; 15 (4) provide for a post-audit function to cover financial transactions, 16 program accomplishment, and compliance with legislative intent; 17 (5) adopt or revise the estimate of receipts required to balance the 18 succeeding fiscal year's budget in order that proposed expenditures do not exceed 19 estimated receipts for that fiscal year; 20 (6) adopt, revise, or initiate revenue measures in order to balance the 21 succeeding fiscal year's budget and the capital improvements section of the budget for 22 the succeeding six years; 23 (7) appropriate funds for the operation of the Alaska Health 24 Insurance Corporation. 25 * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read: 26 (31) the executive director of the Alaska Health Insurance Corporation. 27 * Sec. 11. AS 44.62.330(a) is amended by adding a new paragraph to read: 28 (60) Alaska Health Insurance Corporation. 29 * Sec. 12. PHASED TRANSITION PERIOD. Notwithstanding the provisions of AS 21.58, 30 the Alaska Health Insurance Corporation shall implement the provisions of AS 21.58 on an 31 orderly and gradual basis as follows:

01 (1) by December 31, 1996, the corporation shall begin to implement the public 02 involvement process required under AS 21.58.320, establish the data system required under 03 AS 21.58.260 and begin collecting data, begin the first public health improvement plan 04 required under AS 21.58.310, determine the federal waivers necessary to implement AS 21.58, 05 and begin to develop incentives to attract health care providers required under 06 AS 21.58.110(16); 07 (2) by June 30, 1997, the corporation shall complete the uniform claims form 08 required under AS 21.58.110(4); 09 (3) by December 30, 1997, the corporation shall establish the claims 10 clearinghouse required under AS 21.58.220, determine the health care services required under 11 AS 21.58.170, begin monitoring health care expenditures and utilization patterns, and begin 12 collecting fee information required under AS 21.58.230; 13 (4) by January 1, 1998, the corporation shall implement the peer review system 14 for utilization and quality required under AS 21.58.330 and shall adopt regulations that 15 establish eligibility criteria for enrollment in the state health insurance plan, including a 16 definition of the term "resident" that is consistent with AS 01.10.055 and the purposes of this 17 Act; 18 (5) by December 31, 1998, the corporation shall establish the voluntary cost 19 control system required under AS 21.58.280; 20 (6) by January 1, 1999, the corporation shall develop a long-term health care 21 plan required under AS 21.58.110(19), and establish the deductible and copayment amounts 22 required under AS 21.58.180 and present options to the governor and the legislature on how 23 to finance a state health insurance plan under a market based single payer system; in 24 considering options on financing a state health insurance plan the corporation shall strive to 25 structure the options in a manner that provides protection for benefits provided to retired 26 employees through public or private retirement systems; 27 (7) by January 1, 2000, the corporation shall establish the statewide health care 28 expenditure target required under AS 21.58.270, and, subject to appropriation, begin to provide 29 health insurance coverage for state residents as required under AS 21.58. 30 * Sec. 13. Notwithstanding AS 21.58.270(b), enacted in sec. 6 of this Act, the corporation 31 shall increase the health care expenditure target by the following percentages of the target

01 established under AS 21.58.270: 02 (1) in 2000, 1.5 percent; 03 (2) in 2001, 1.0 percent; and 04 (3) in 2002, 0.5 percent. 05 * Sec. 14. This Act takes effect July 1, 1996.