Legislature(2019 - 2020)CAPITOL 106
05/02/2019 03:00 PM House HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| HB92 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 92 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 92-DIRECT HEALTH: NOT INSUR; ADD TO MEDICAID
3:07:26 PM
CO-CHAIR SPOHNHOLZ announced the only order of business would be
HOUSE BILL NO. 92, "An Act exempting direct health care
agreements from regulation as insurance; establishing a direct
care payment program for medical assistance recipients; and
providing for an effective date."
3:07:49 PM
CO-CHAIR ZULKOSKY moved to adopt the proposed committee
substitute (CS) for HB 92, Version 31-LS0243\E, Marx, 4/26/19,
as the working document. There being no objection, Version E
was before the committee.
3:08:19 PM
ERIN SHINE, Staff, Representative Jennifer Johnston, Alaska
State Legislature, on behalf of Representative Johnston,
sponsor, stated Version E maintains the underlying intent of the
original version of HB 92, which is to exempt direct practices
from the definition of insurance. She said Version E makes two
major changes from the original bill (Version U): 1) it limits
to direct primary care; 2) it removes Sections 2 through 7 of
Version U related to mandatory Medicare/Medicaid participation.
Further, Version E adds a new section in response to concerns
about transparency and consumer protection.
MS. SHINE began the sectional analysis of Version E by drawing
attention to the updated title on page 1, lines 1-2, which read:
"An Act relating to insurance; relating to direct
primary care agreements for health care; and relating
to the Alaska Unfair Trade Practices and Consumer
Protection Act."
MS. SHINE explained the updated title identifies that it is
direct primary care; removes the medical assistance recipients,
which is the Medicare/Medicaid language; and adds that it
relates to Alaska's Unfair Trade Practices and Consumer
Protection Act (UTPA).
MS. SHINE noted Section 1 of Version E is a new whole section
while in Version U it was a subsection. Section 1 would create
a new title, Sec. 21.03.031, for direct primary care agreements.
This would exempt direct primary care agreements from the
application of Title 21, relating to insurance, if a written
health care agreement contains the following information:
describes the services provided in exchange for a periodic fee;
allows either party to terminate the agreement as long as 60
days' notice is given; clearly states that the agreement is not
health insurance in at least 12-point font in plain language;
and prohibits the provider from receiving additional
compensation for the services rendered.
3:10:56 PM
MS. SHINE detailed the changes made in Section 1 of Version E.
She brought attention to subsection (a), paragraph (5), page 2,
lines 7-8, which state, "is written in a font not smaller than
12 points and in plain language that an individual with no
medical training can understand". She said this language is new
and was added in response to concerns about transparency and to
ensure consumer understanding of the direct care agreement. She
explained that subsection (b), page 2, lines 12-13, is new
language that was added to include consumer protection statutes
and regulations under AS 45.45.915. She noted subsection (c),
page 2, lines 14-25, is new language that was added to require
direct primary care providers to submit certain information no
later than September 1 of each year to the [Division of
Insurance, Department of Commerce, Community & Economic
Development]. This information includes the number of providers
in a practice, the [practice's] capacity for direct primary care
patients, the number of direct primary care patients and
periodic fees paid for the preceding calendar year, and any
other information requested by the division. She stated that
subsection (d), beginning on page 2, line 26, defines health
care, health care practices, and health care provider for
purposes of [Section 1]. Paragraph (2) of subsection (d) is new
language that was added to provide a definition of health care
practice.
MS. SHINE pointed out that all the language on page 3 from line
5 onward is new to this bill. She explained Section 2 is for
direct primary care agreements for health care. It adds a new
section restricting a direct primary care provider from
terminating agreements solely based upon health status, or
declining to accept a new patient unless the practice has
received its maximum capacity of patients, or is unable to
provide the level of care required by the patient. This also
provides definitions and citations for the definitions of direct
primary care agreement and health care provider. She said
Section 3, beginning on line 21, adds a new violation under the
Unfair Trade Practices and Consumer Protection Act (UTPA) for
violating AS 45.45.915.
3:13:47 PM
REPRESENTATIVE TARR asked why payments related to Medicare and
Medicaid were removed from the bill.
MS. SHINE replied the sponsor sought to simplify the bill
because it is unclear how the state would be affected by
Medicare and Medicaid patients participating in [direct primary
care] agreements. She noted that after [Version E] was drafted,
the Centers for Medicare and Medicaid Services (CMS) issued
guidance, which the Department of Health and Social Services
(DHSS) would be able to speak to. Furthermore, the inclusion of
Medicare and Medicaid recipients in primary care agreements -
that was part of previous versions of the bill - would have
established Alaska as the first state to do so. Ms. Shine urged
that there be more discussion on this issue.
REPRESENTATIVE TARR asked whether Ms. Shine is saying that the
billing codes for this service don't yet exist in Medicaid and
so it would be unclear whether a Medicaid enrollee could
participate, and have it covered by Medicaid.
MS. SHINE responded it is unclear how the state would interact
with CMS on how to pay for services. She posited payments may
be structured in a manner similar to compensation by a health
management organization (HMO) or another model. The previous
version of the bill, which included this provision, contained
"cumbersome" conditional language.
3:16:13 PM
DONNA STEWARD, Deputy Commissioner, Office of the Commissioner,
Department of Health and Social Services (DHSS), addressed
Representative Tarr's questions about what potentially might be
involved. She spoke as follows:
The situation with CMS is what they have offered, an
opportunity for the Medicare program to have models
that move forward, that look at direct primary care.
They've not necessarily extended the same modeling to
the Medicaid program but all that means is in order
for us to move forward, we would need to engage with a
demonstration waiver, so an 1115 waiver, sketch out
what it is that we are hoping will, you know, be
accomplished through moving through that process and
then beginning that negotiation with CMS to
potentially adopt both a new provider type and then a
new way to bill for that service. Right now in fee
for service Medicaid programs, which Alaska, that is
the design for our program, we are not allowed to
prepay for a service, and so at this point that is
kind of how the direct primary care is used because we
would be paying a monthly fee for a service that
potentially the individual may not need that month,
and so it just needs to be a negotiation through that
waiver process in order to develop the new provider
type, how the structure would work, and then get the
payment mechanism and model in place.
3:17:52 PM
CO-CHAIR ZULKOSKY recalled that the bill's language related to
Medicaid percentage is a problem because of the way Alaska's
Medicaid payments are structured; for example, Washington has a
managed care payment plan and Alaska is fee for service.
MS. SHINE agreed Alaska's [plan] is currently fee for service,
although there are Medicaid demonstration projects that might be
coming online that utilize managed care forms of payment. She
offered her belief that there are other states that do have
participation from Medicaid in direct primary care, but she
doesn't believe it is available to Alaska currently.
3:18:56 PM
REPRESENTATIVE CLAMAN turned attention to Section 3 of Version E
related to the Unfair Trade Practices and Consumer Protection
Act (UTPA). He asked what portion of the services by providers
would be subject to the UTPA.
MS. SHINE offered her belief it would have to be governed by
what's in the contract between the provider and the patient,
such as a breach of contract related to reimbursement or
services.
REPRESENTATIVE CLAMAN posed a scenario in which the patient of a
primary care provider alleges that the services provided
constitute malpractice. He inquired whether this provision
would mean that a malpractice claim on the services would be
subject to the treble damage provisions of the UTPA.
MS. SHINE offered her understanding that they would be different
and a claim for malpractice would be in a different section.
This is what governs the contract. She deferred to the
Department of Law (DOL) to identify what would be covered under
this new section that would be added to the UTPA. She offered
her belief that anything that happens currently under practice
for medical malpractice would still be covered in the same way.
This is adding a section specifically to these direct primary
care agreements, so that if there is a consumer complaint that
there is something within the Consumer Protection Unit that has
the authority to be able to address them. Ms. Shine said she
would get back to the committee with clarification.
3:21:28 PM
REPRESENTATIVE CLAMAN posed a scenario in which there is an
argument that [the provider] was supposed to provide a certain
amount of services as a function of the contract and the failure
to provide those services. For example, prescription medication
was part of the contract but [the provider] didn't provide
consumer medication that was covered by it. He surmised there'd
be a claim under the "deceptive trade practices act" for the
failure to provide the medication, but that the treatment itself
wouldn't be covered.
MS. SHINE offered her belief that that is how it is set up. She
said she believes that if there was malpractice within the
process of providing the medication that is outside of what
would be constituted as malpractice it would be under a
different section. She said she will get back to the committee
with clarification.
REPRESENTATIVE CLAMAN asked about circumstances related to
contracts with primary care clinics outside of the participating
groups [of direct care providers]. He asked whether those
providers would be subject to the provisions of the UTPA.
MS. SHINE responded she doesn't believe so because it would not
be a direct primary care practice. She said she would get back
to the committee with clarification.
3:23:45 PM
The committee took an at-ease from 3:23 p.m. to 3:28 p.m.
3:28:08 PM
REPRESENTATIVE CLAMAN drew attention to Section 3 of Version E,
which would add provisions into the Unfair Trade Practices and
Consumer Protection Act (UTPA). He noted he is aware of the
treble damages provision of the UTPA. In a situation of a
malpractice allegation against a clinic that has one of these
contracts in place, he asked whether Section 3 would open the
care provided to a treble-damages claim.
3:28:56 PM
CYNTHIA FRANKLIN, Assistant Attorney General, Special Litigation
and Consumer Protection, Civil Division (Anchorage), Department
of Law (DOL), answered that the treble damages section in UTPA
belongs to individual litigants alone. Thus, in an action by
the state under UTPA, "the civil penalty section trumps the
treble damages section." So, the interaction would be between a
consumer's individual UTPA lawsuit against the clinic or
provider, and their medical malpractice claim. How those two
legal claims would interact would be a question for a private
attorney. However, the UTPA claim damages would be limited to
whatever damages arose from the violations of the section of the
direct primary care provider statutes. So, if HB 92 is passed,
the consumer would be limited to claim damages for whatever
actions by the clinic violated the provision in the bill.
3:30:13 PM
REPRESENTATIVE CLAMAN posed an example of a man who signs a
contract with a clinic to provide services at a certain monthly
fee to come as often as the patient wants. The man's wife has a
child with the clinic and the man believes there was malpractice
committed in the course of delivering that child. He asked
whether that means the man has a malpractice claim under the
contract.
MS. FRANKLIN responded, "I don't know how the malpractice claim
would interact with the contract, but I don't believe that
Section 3 and the patient's individual lawsuit under the UTP
would come into play in that scenario."
REPRESENTATIVE CLAMAN inquired whether Section 2 and Section 3
give the Division of Insurance the ability to supervise and
regulate as a governmental matter what the clinic is doing. He
further asked what these two sections of the bill are doing.
MS. FRANKLIN replied:
It's my understanding that Section 3 is added because
... the lack of characterization of this type of
provider care as insurance would prevent the Division
of Insurance from regulating, and in most
circumstances when we have some kind of consumer
transaction, and there's no other regulating
authority, it falls under the Unfair Trade Practices
Act, and is added as a section here. So, in terms of
governmental regulation, it defaults to the Department
of Law, the Attorney General's office, to monitor
consumer complaints on a business and determine
whether or not any of the actions complained of
violate any section of the Unfair Trade Practices Act.
In this case it would include sections 1 and 2 of the
bill in front of you. And so we, as AGs, would
evaluate whether the complaint of conduct violated
sections 1 and 2 and then theoretically, could, if
there was a pattern of conduct on a particular clinic
or provider, that was cheating, so to speak, or not
playing by those rules that are set out in sections 1
and 2, then theoretically, we could bring a state
action in superior court seeking civil penalties for
the business violating those other sections, and that
would act as ... the governmental regulatory
authority. But because it's placed in the Unfair
Trade Practices Act, it also gives individual
patients, as consumers of the services, individual
rights of action under the Act.
3:33:32 PM
REPRESENTATIVE JACKSON stated she likes that Medicaid and
Medicare [patients] were removed from the bill because [direct
care providers] fulfil the needs of those who do not qualify for
Medicaid and for whom "regular" insurance is too expensive.
Also, the bill provides entrepreneurial opportunities for
physicians. She said she doesn't like the provision requiring
that 20 percent of patients are qualified for Medicaid. She
said Medicaid does not pay before a service and asked whether
Medicaid is able to reimburse a patient if [direct care] is
preferred by the patient. Representative Jackson recalled
previous testimony that in Florida, Medicaid patients do not use
Medicaid to see [direct care providers]. She questioned whether
Medicaid patients could get reimbursed for services provided [by
direct care providers].
3:35:41 PM
REPRESENTATIVE JENNIFER JOHNSTON, Alaska State Legislature,
speaking as the sponsor of HB 92, said Florida has a different
program for its Medicaid expansion group. Another bill has been
introduced that proposes for Alaska "to have a plan similar to
help people as they get off Medicaid expansion." However, it is
a plan that Alaska doesn't have currently, and it is a plan that
requires patients to pay some amount. That is why in Florida
this does work with the Medicaid program, but it does not work
in Alaska.
REPRESENTATIVE JACKSON recalled testimony from a speaker who
said people [who qualified for Medicaid] were willing to pay for
services.
MS. SHINE answered that each state implements the program
differently; [in Alaska], Medicaid is not currently set up to
pay fees. She continued:
I think it's not targeted at one population; these are
direct primary care agreements. I think you'll hear
through testimony from other states and how it's
worked, that I think that there are people ... that
have Medicaid, people that have Medicare, people that
are uninsured, people that have employer sponsored or
exchange insurance that are accessing direct primary
care. We included that language to make sure that ...
Medicaid and Medicare patients were not excluded from
them. I think it is still part of the conversation,
but it is not in the bill.
3:38:12 PM
CO-CHAIR ZULKOSKY asked Ms. Franklin to clarify the unfair trade
practice protections added in Section 3 and whether it would
mean that any claims resulting out of a direct care agreement
would be limited to damages from violations of the agreement and
would not be related to malpractice damages.
MS. FRANKLIN replied that she thinks an individual patient would
have both claims; the [Unfair Trade Practices Act] claim would
be unrelated to the medical malpractice claim because the
medical malpractice claim addresses the quality of the
professional treatment and the [Unfair Trade Practices Act]
claim would be a claim that something about the business setup
or the billing violated the Unfair Trade Practice Act or
violated Section 1 or Section 2.
CO-CHAIR ZULKOSKY surmised the unfair trade practices reference
in Section 3 does not withhold or hold harmless any direct care
agreement from malpractice claims.
MS. FRANKLIN responded correct.
3:40:02 PM
REPRESENTATIVE CLAMAN posed a scenario in which [the office of
Special Litigation and Consumer Protection], DOL, filed a claim
related to direct care agreements in [violation of the consumer
protection act]. He surmised this claim would be limited to the
kinds of issues within Section 1, such as the terms of the
contract itself.
MS. FRANKLIN answered correct.
REPRESENTATIVE CLAMAN requested Ms. Franklin to describe what
kind of complaints those might be.
MS. FRANKLIN replied it would be a situation where a clinic
advertised services at some rate or advertised services in a
particular way so as to attract consumers to that business in
competition with other businesses and was somehow misleading or
deceptive in the way that the contract was presented and the way
that the consumer was attracted to the business or was treated
by the business in opposition to the way that the statute
requires the business to operate. So, in the situation of a
state action against a business, DOL would look for a pattern of
multiple consumer complaints where, in its business model, the
primary care provider was attempting to get an edge up on its
competition by appearing to offer something it really didn't
offer or appearing to have rates that were substantially lower.
3:42:22 PM
REPRESENTATIVE CLAMAN concluded DOL would investigate the false
or deceptive advertising of services.
MS. FRANKLIN responded yes. In further response, she confirmed
[the office of Special Litigation and Consumer Protection, DOL],
does not participate in medical malpractice claims.
REPRESENTATIVE CLAMAN inquired whether, in the case of an
individual complaint for malpractice against a clinic, it is
DOL's view that [under Section 3] the Unfair Trade Practices Act
provisions would now apply to the individual complaint.
MS. FRANKLIN answered yes. If HB 92 were passed, a complaint by
an individual patient against a physician in a direct primary
care practice could have counts of medical malpractice and,
theoretically, also a complaint of unfair trade practices. From
a legal perspective, the bill could provide for additional
claims.
3:44:09 PM
CO-CHAIR SPOHNHOLZ asked how claims of noncompliance with
consumer protection laws are typically brought to the [office of
Special Litigation and Consumer Protection, DOL].
MS. FRANKLIN replied that consumer complaints from individuals
are first brought for mediation of consumer issues and, if
multiple complaints are received against one business, an
investigation may be opened. In addition, cases are referred by
other state agencies and professional licensing boards. After
an investigation, the attorney general determines whether the
Unfair Trade Practices Act has been violated.
CO-CHAIR SPOHNHOLZ inquired whether it is typically attorneys or
members of the public that come to Ms. Franklin's office with a
concern about unfair trade practices.
MS. FRANKLIN responded it is individual consumers, they are
anyone filing a complaint with her office.
3:46:00 PM
CO-CHAIR SPOHNHOLZ opened invited testimony.
3:46:21 PM
The committee took a brief at-ease.
3:46:41 PM
JAY KEESE, Executive Director, Direct Primary Care Coalition,
provided a PowerPoint presentation entitled, "Direct Primary
Care in 2019." Turning to slide 1, Mr. Keese informed the
committee that the history of this starts with a direct practice
act that passed in Washington State. It was essentially
included in the Affordable Care Act (ACA), to define direct
primary care (DPC) - also known as medical homes - as a medical
service that could be offered in conjunction with qualified
health plans. Thus, patients covered by ACA through exchanges,
or through their employer, could contract directly with a
qualified health care practice; primary care was removed from
qualified health plans to allow DPC practices to deliver primary
care and to allow insurers to insure against risk and medical
circumstances, such as acute care and hospitalization.
Subsequently, [DPC] practices have grown to over 1,000 practices
in 48 states and Washington, D.C. Mr. Keese said the median fee
is about $70 per person per month, and about $165 for a family
of four. He advised employer claims data has shown savings of
up to 20 percent of the total cost of care because service by
primary care providers is less expensive and reduces downstream
expenses such as hospitalization and specialty care.
3:48:54 PM
MR. KEESE moved to slide 2 and said that since ACA was enacted,
DPC legislation has passed in [26] states, including recent
legislation in Georgia.
MR. KEESE drew attention to slide 3 and noted there is confusion
between DPC and concierge medicine. The primary distinction, he
explained, is concierge medicine provides medical services that
are typically covered by insurance and there are extra fees for
noncovered services and a higher level of access to a physician.
In DPC, fees cover expanded access, in addition to all payments
for medical care, without third party insurance reimbursement.
MR. KEESE said slide 4 illustrates prices for lab tests,
procedures, and drugs offered at a "typical primary care
practice." He explained that a DPC practice provides primary
care by physicians as well as access to drugs to labs at greatly
discounted prices. For example, the prescription cost of
Lexapro is $113 for 30 pills, but it can be had at a cash pay
price of $4.80. He pointed out drugs can be obtained for less
than an insurance co-pay and savings on prescriptions are beyond
that of savings on primary care.
3:51:19 PM
MR. KEESE continued to slide 5 which illustrated some of the
arrangements between direct primary care practices and self-
insured employers, Medicare Advantage, state and local employee
funds, and other entities. Slide 6 listed data related to DPC
arrangements with large employers, such as Boeing. He said the
data indicates reductions in total cost of care up to 20 percent
and that employees with higher health care costs have reduced
their expenses.
MR. KEESE turned to slides 7 and 8 to discuss state legislation.
He advised some states are clarifying that DPC practices are
outside of state insurance regulation and are medical services.
Because federal interpretation of health saving account (HSA)
eligibility rules differ, pending federal legislature would
clarify that individuals with HSAs are eligible to have a DPC
and an HSA. He cautioned that the aforementioned legislation is
not currently in effect, thus the Internal Revenue Service (IRS)
has interpreted DPCs as "other" coverage and DPCs are not
compatible with HSAs.
3:55:52 PM
PHILIP ESKEW, DO, JD, MBA, Family Medicine Physician and
Attorney, DPC Frontier, noted he is a family physician doing
direct primary care as well as a DPC attorney. He said 26
states now have legislation that define DPC as not being
insurance. The motivation for defining DPC is to save DPC
physicians, patients and the Division of Insurance headaches -
it is taking a grey area in the law and making it more black and
white and the Division of Insurance has better things to do than
reading each contract in detail for each DPC practice that opens
up. States that have done this well and been happy about it
have given a clear definition of what DPC is and [Version E]
does that. He said [Version E] defines DPC as outside of
insurance and prohibits what he calls "double dipping" which
distinguishes DPC from concierge, and the bill defines the
mandatory disclosures in the [direct care] contract and avoids
inadvertently blocking the state or an employer down the road
from adopting and paying for DPC.
DR. ESKEW returned to the earlier discussion about
patient/consumer protection. He said his impression is that
even without the consumer protection provision in this bill,
"that department" would probably still default and have
jurisdiction to be involved in a patient protection dispute even
when it isn't explicitly stated. He said he thinks that would
already apply to a standard fee for service practice that might
be open and independent in the state of Alaska presently. He
said most states have not felt the need to explicitly state that
jurisdiction.
3:58:09 PM
DR. ESKEW stated he is concerned about Version E's reporting
requirements to the [Division] of Insurance on page 2, which is
modeled after Washington's law. He pointed out that of the 26
states that DPC laws, only two have any reporting requirements
to the department of insurance, which are Washington and Oregon;
the others have not found it necessary for a variety of reasons.
He pointed out that the intent of the bill is to reduce the
burdens on the Division of Insurance and the bill states that
the Division of Insurance does not have jurisdiction over these
types of contracts because they are not a transfer of risk and
they involve a relationship between a physician and a patient
and historically those relationships are policed by the state
medical board. He said he thinks it would be wise to have this
policed by Alaska's state medical board as well and that
reporting to the Division of Insurance would be a burden to that
division. He advised that a 2018 report from Washington State
indicates there has not been one patient complaint in Washington
State for ten years [document not provided].
DR. ESKEW noted 48 states already allow DPC physicians to see
Medicaid patients in the sense that freedom of contract applies,
and those patients allowed to pay to join a DPC practice.
However, laws in Kentucky and Colorado prohibit any private
contracting with Medicaid patients in those states, DPC or
otherwise. He supported Version E's removal of references to
Medicaid and Medicare because the initial bill about DPC should
be about just defining it. If Alaska wants to do a pilot
program, be it in the Medicaid space or be it with state
employees, he would do that with a second piece of legislation
down the road after people understand what DPC is and should be.
4:01:30 PM
REPRESENTATIVE DRUMMOND understood that 48 states allow DPC
physicians to see Medicaid patients. She asked about provisions
in state legislation that address Medicare patients.
DR. ESKEW replied that Medicare is different than Medicaid. He
explained physicians volunteer to participate/enroll in Medicaid
programs. In some states, physicians can participate in
Medicaid and still have the freedom to privately contract, but
other states don't allow physicians who privately contract to
formally enroll in Medicaid. Medicare is different. In order
to privately contract for covered services under Medicare,
physicians must choose to "opt-out" of Medicare, which means the
physician is still credentialed with Medicare, but the physician
promises not to charge Medicare, and the patient agrees not to
seek reimbursement from Medicare, thereby allowing the physician
and the patient to contract for services that Medicare covers.
4:03:00 PM
REPRESENTATIVE TARR stated Alaska's health care system is more
fragile than that of other states. She spoke in support of the
reporting requirement provisions of the bill and requested Dr.
Eskew's thoughts on this being overly burdensome for providers.
DR. ESKEW responded DPC physicians seek to spend more time with
patients and less time with documentation. He suggested that if
Alaska wants to track data it should be specific about what is
wanted and specific about where to house it. He pointed out
that Version E puts the burden of aggregating data on the
[Division] of Insurance, which he thinks a strange decision
since it is being said that this is not insurance. He suggested
the burden of aggregating data be put elsewhere, such as with
the state medical board and that there be specifics on what the
medical board should track. Currently, he noted, the bill
includes a statement that gives [the division] cart Blanche to
add lots of additional requirements and things that must be
tracked and that could become quite burdensome in theory.
4:05:28 PM
REPRESENTATIVE TARR asked whether the provision for additional
reporting might discourage providers from participating.
DR. ESKEW answered that if the burdens became great enough then
providers might not sign up. He advised that if the bill does
not become law, DPC practices in Alaska will continue to operate
under the purview of the [Division] of Insurance, which is the
situation HB 92 seeks to avoid by defining DPC.
4:06:45 PM
CO-CHAIR SPOHNHOLZ reviewed the limited reports required by the
bill: the number of health care providers in the practice; the
number of patients the practice has the capacity to serve; the
number of patients who entered in or maintained a DPC agreement
with the health care practice in the previous calendar year and
the fee paid. She said any practice would have this information
readily available.
DR. ESKEW agreed that those reports are easy to do, except for
[Section 1] (c)(4), which states, "other information requested
by the division."
CO-CHAIR SPOHNHOLZ asked for the number of states that allow
Medicaid payments for direct care agreements.
DR. ESKEW replied that there are some states that have or had
Medicaid pilots in place, such as Michigan and Washington State;
however, most states have not formalized Medicaid payments for
DPC. Oklahoma debated a reimbursement system in which the
patient would be reimbursed for a portion of the monthly fee,
similar to a voucher or food stamp system. If Alaska takes no
action on Medicaid [by HB 92], he said, "physicians will be able
to find a way to see Medicaid patients should [ these patients]
choose to join a DPC practice and pay for care on their own.
4:10:11 PM
ERIKA BLISS, MD, Equinox Primary Care, informed the committee
she was formally CEO of [Qliance Medical Group (Qliance)]. She
said she supports the previous testimony by Mr. Keese and Dr.
Eskew. Dr. Bliss said, "We were active in getting the initial -
and then subsequent amended - laws passed in Washington and
things have operated fairly well since then." She agreed with
Dr. Eskew that the monitoring process in Washington State is not
useful and explained the intent of reporting was to protect
consumers from situations that did not occur. She said DPC
practices are organizations trying to revive primary care and
create a successful business model that allows providers the
time needed to care for patients. Further, Dr. Bliss said the
reported data has not been utilized and assured the committee
that [if HB 92 becomes law] there are other avenues for consumer
recourse. Although Qliance was closed in 2017, DPC practices
are growing around the country due to the needs of those who do
not have any, or adequate insurance, or adequate insurance-based
primary care. She said she now has a solo DPC practice in
Seattle, which is the only way she can provide comprehensive
primary care to patients who have significant medical issues.
She said she has more time to provide care, avoids the hassles
of billing insurance companies, and sets her prices.
4:14:54 PM
DR. BLISS further explained her practice is not unique in that
she serves a wide range of socioeconomic levels; some of her
economically-deprived patients pay full costs, however, it is up
to her and her patients to work out discounts and payment plans
to maintain patients' access to care when their economic
circumstances change. Qliance was the first DPC organization to
undertake a largescale Medicaid program pilot. Unlike Alaska,
Washington State has a Medicaid managed care environment and in
2014, Qliance had a combination of two-thirds Medicaid patients
and one-third ACA exchange patients for a total of 35,000
members. Although Qliance failed due to problems with the
Medicaid managed care companies and the lack of controls at the
state level, the program reduced the cost of care for Medicaid
recipients, especially for chronically sick and disabled
patients. In addition, patients were very pleased with their
care and improved health. Dr. Bliss remarked:
We got quite a few people actually off of Medicaid and
back to work, and I think that that probably didn't
mesh well with the goals of some of the managed care
folks, and unfortunately, it's sort of perverse
incentives in some cases. But ... in Alaska, you
might want to really think about it, since you still
have a direct contracting relationship with providers,
this could be a really interesting opportunity for
you....
DR. BLISS continued to explain Alaska could create an incentive
for providers to serve Medicaid patients well, and over time, by
paying a reasonable monthly fee, similar to Qliance; however,
Qliance overinvested in its Medicaid pilot and relied on
assurances from the plan and the state.
4:19:38 PM
REPRESENTATIVE TARR surmised that as a business owner Dr. Bliss
can determine how many discounted rates she can offer.
DR. BLISS replied correct. At one time, she recalled, medical
practices were expected to provide a certain amount of charity
care, but some HMOs are prevented from doing so. She said DPC
providers can choose rates for patients.
REPRESENTATIVE TARR offered her understanding that DPC practices
can discount medical care, but not prescriptions.
DR. BLISS responded correct and said a benefit of the DPC
business model is that it allows her and her staff to advocate
for patients and search for better prices. In certain states
DPC practices can work together and negotiate "package deals"
on, say, radiology studies.
4:23:29 PM
REPRESENTATIVE TARR, speaking from her experience, related that
insurance rates in the price range of $70-$100 per month usually
have a high deductible and little or no preventative care. She
asked how DPC contracts for the same price can provide primary
care as described.
DR. BLISS answered that a catastrophic insurance plan provides
coverage against a terrible event; in Washington State, the
cheapest insurance possible - including a high deductible -
costs $300 per month. In contrast, an individual entering in a
DPC contract purchases care and a membership in the practice
that will provide on-demand primary care: all an individual's
preventable and primary care needs, when and where they are
needed. She described several DPC office efficiencies that
lower the cost of the delivery of care and increase flexibility
for the patient and provider; further, DPC lowers the barriers
to care and encourages individuals to use primary care more
often in order to avoid complications and emergencies. Dr.
Bliss said that pairing DPC with a catastrophic insurance plan
would provide "pretty decent" health care and health coverage.
4:28:39 PM
CO-CHAIR SPOHNHOLZ returned attention to the reporting
requirements in Washington State and asked what elements of
reporting are onerous to Washington's DPC providers.
DR. BLISS replied that the requirements are not onerous. She
said her objection at first was that DPC providers have nothing
to do with the insurance commissioner because DPC practices are
not insurance, they are businesses providing medical care and
therefore should be governed by the appropriate agencies for
commerce and for medical affairs. She cautioned Americans don't
know that the difference between health care and health
insurance is that health insurance protects one against risk.
CO-CHAIR SPOHNHOLZ understood Dr. Bliss to be saying that the
reporting isn't onerous, it is just in the wrong place.
DR. BLISS clarified it is onerous because the reporting isn't
being put to good use and perpetuates the notion that all things
have to eventually roll up into insurance. She related that
most [DPC providers] would like to see the departments of health
in their states or legislators assign some other body to look at
the system of delivery of care and take it seriously as a piece
of the delivery system and study it as such.
4:32:18 PM
REPRESENTATIVE JACKSON commented that she looks at this as "old
fashioned doctor-patient care before insurance blew up ... when
they did house calls." She said she therefore understands the
statement of having to report anything to insurance companies
because this isn't insurance, it is a business with health care
professionals to their patients. She surmised that Dr. Bliss is
saying the reporting should go to the state medical board, not
the [Division of Insurance].
DR. BLISS replied yes.
REPRESENTATIVE JACKSON surmised [HB 92] would attract more
doctors because they wouldn't have to go through the rigors of
insurance.
DR. BLISS agreed that this is true. In her experience, medical
doctors, residents, and medical students around the country are
excited about practicing primary care, although not all doctors
are willing to take the risk of entering a DPC business.
4:36:05 PM
MANDY WEEKS GREEN, Senior Health Policy Analyst, Office of the
Insurance Commissioner (OIC), Washington State, said she is
responsible for reviewing and approving DPC registrations,
reporting noncompliance, and monitoring DPC practices. She
related that the laws of Washington State consider direct
practices to be insurance unless they apply for - and qualify
for - the exception for insurance. So, it is not that all
direct practices are an exception, but if a practice does apply
and is conducting its business within the bounds of the statute,
then it does qualify for the exception. However, many practices
do not apply to OIC and do not initially qualify because they
offer other services, or do not operate within the legal
boundaries of DPC, thus OIC helps practices comply with the laws
and attain the exception.
4:37:48 PM
CO-CHAIR SPOHNHOLZ surmised that in Washington State, practices
must apply [to OIC] to be exempted from insurance.
MS. WEEKS GREEN replied yes. She explained that a practice
applies for registration before operating a DPC practice. This
registration requirement before a direct practice operates is an
important protection for consumers because it enables the OIC to
review a direct practitioner's application, contract, and
marketing materials before services are offered to consumers.
It is the best time for OIC to intervene and help make
corrections to prevent consumers from being harmed and ensure
compliance with the direct practice laws. For example, OIC has
been able to prevent several billing structures that were based
on a person's health status, such as charging higher fees for
consumers with certain conditions or chronic conditions.
Washington State has a general prohibition on discrimination as
well as a specific prohibition to prevent billing fees that are
based on a person's health status.
4:38:52 PM
MS. WEEKS GREEN pointed out that Washington restricts a
provider's reasons for declining or terminating a patient. This
helps OIC when reviewing contracts to ensure that consumers are
properly advised of their rights around termination. When
reviewing applications containing contracts that reserve the
right to terminate, accept, or decline patients for any reason,
OIC works with those practices to revise their language to
reflect the lawful language requirements.
MS. WEEKS GREEN further pointed out that Washington law has been
helpful in setting limitations around billing, cancelation, and
retaining unused fees. Direct practices typically bill on a
monthly basis in advance for the month. Washington law requires
a refund for the pro-rated unused fees from the date the
provider was notified of cancelation. Having this provision has
enabled OIC to remove clauses in several direct practice
contracts that sought to retain the money through the contract
period. The OIC has also been able to prevent direct practices
from charging consumers cancelation fees. Additionally, if a
provider would like to collect money for more than a month in
advance - for example, on an annual basis - Washington statute
says a trust account must be set up to retain the collected
money and ensure that those fees are still only withdrawn from
the account on a monthly basis. There are also several
requirements that must be contained within the contract which
were developed to protect consumers. One of those is that the
contracts must encourage the consumers to retain insurance or
purchase supplemental plans to cover emergencies.
4:40:33 PM
CO-CHAIR ZULKOSKY remarked that these consumer protections are
interesting and comprehensive, as she wants to ensure that
Alaskans are protected as legislators consider this proposal.
She requested Ms. Weeks Green to discuss the resources that are
needed within the Washington OIC to uphold these protections and
to provide the work being described.
MS. WEEKS GREEN responded she is the sole person who manages
direct practices. It's only a small portion of her duties, she
said, because she is a health care policy analyst, so it doesn't
take her an exceptional amount of time to review a contract,
communicate with a provider, and discuss needed changes. What
may involve more time for investigation and some additional
resources, but not very much, is when unlicensed, unregistered
entities are offering services that are inappropriate under the
statute.
CO-CHAIR ZULKOSKY requested a written copy of Ms. Weeks Green's
testimony.
MS. WEEKS GREEN answered she would be happy to.
4:42:13 PM
REPRESENTATIVE CLAMAN observed the committee has been provided
with the Washington statutes. He inquired whether regulations
have been issued that relate to this or whether everything is in
statute.
MS. WEEKS GREEN replied everything is in statute and currently
there are not any regulations.
REPRESENTATIVE CLAMAN offered his understanding that even though
this is technically not insurance, the Washington Legislature
effectively decided that it would be subject to insurance
department supervision as opposed to the consumer protection
division.
MS. WEEKS GREEN responded that this is insurance if it is looked
at from the definition of insurance because insurance is risk
shifting. This means that [a practitioner] accepts the risk of
whether [the practitioner] or the client is going to receive
more benefit or less benefit from the contract. So, if billing
on a monthly basis, a doctor may receive more payment from the
patient if the patient doesn't see the doctor every month, so
the doctor would be receiving the benefit of that contract. The
risk shifting comes when the patient utilizes the service more
than has been use accounted for.
REPRESENTATIVE CLAMAN asked whether Washington has specifically
defined these agreements as a form of an insurance agreement,
whereas the proposal before the committee would specifically say
that it's not an insurance agreement.
MS. WEEKS GREEN answered: "It is an insurance agreement. It's
what is accepted from the insurance code as long as everything
is done appropriately. So ... we accept it from regulation as
long as everything is operating smoothly."
4:44:18 PM
REPRESENTATIVE JACKSON offered her understanding that Ms. Weeks
Green is saying that direct primary care is an insurance, but
technically it is a service between a medical provider and a
patient. She inquired whether this threatens the insurance
industry in any way and is competitive.
MS. WEEKS GREEN replied she doesn't know that competition is the
underlying element of why Washington regulates [direct primary
care practices]. She said Washington is concerned about them
because they can cause consumer harm when they're not operated
appropriately and within the bounds. She added she doesn't
believe that insurance companies are necessarily threatened by
the practice of direct practices, but she does think that
healthier people might be pulled out of the market into direct
practices. However, Washington doesn't know anything about that
necessarily because it is unable to get into studies on that.
REPRESENTATIVE JACKSON understood Ms. Weeks Green to be saying
insurance is in it to protect the patient. She asked whether
that wouldn't be the purpose of the state medical board to make
sure the doctors are licensed and have the qualifications.
MS. WEEKS GREEN responded that OIC can report to the state
medical board. Any violation of the insurance code is also a
violation. Any violation under the direct practice statute is
also a violation under the ethics board of the medical board, so
there is the ability to cooperate for investigations.
REPRESENTATIVE JACKSON clarified she is asking as to why
Washington has the OIC looking out for the concerns and safety
of the people rather than Washington's medical board.
MS. WEEKS GREEN answered that OIC is where it landed. The OIC
does consider it insurance, it isn't a pay-for-service model, it
isn't "I pay my provider $10 to go see them." It is one thing
if a provider wanted to charge patients a nominal fee and
because the provider wants to operate a low-income clinic and
charge the patient $5 instead of $80 although those $5 could add
up to $80 a month. It is another thing when a provider says he
or she is going to take the risk that a patient may or may not
use this service.
REPRESENTATIVE JACKSON maintained that that is exactly what it
is doing, just like when she purchases an extra maintenance plan
on her vehicle, she realizes she may not use it, but if she
needs it it's there. So, she concluded, that would be the
choice of the patient.
MS. WEEKS GREEN replied that that is insurance, too.
4:47:50 PM
CO-CHAIR SPOHNHOLZ observed from the [Direct health care
practices in Washington, Annual report to the Legislature, dated
12/1/18] that there were over 18,000 direct practice [patients].
She inquired about the number of contracts out of the number of
practitioners that are found by OIC to be problematic or not in
compliance with state law on an annual basis.
MS. WEEKS GREEN responded that OIC doesn't receive that many,
which is why it doesn't involve a lot of her time.
CO-CHAIR SPOHNHOLZ observed from the report that there were 41
direct practices in 2018 in the state of Washington.
MS. WEEKS GREEN answered that those 41 practices are practices
that are continuing to operate. She guessed OIC receives maybe
five applications a year, but OIC suspects there are many
entities that are not applying with the OIC and are operating
without a permission to operate. The number of practices
applying is very low, but the number of practices that have
clauses within their contract that create some problem with the
direct practice statute is fairly high. She has conversations
with about 50-75 percent of direct practitioners to help them
resolve their contractual issues, just to protect consumers
during the registration process. As long as [practitioners] are
coming in before they are operating it is usually very easy -
she discusses it with them, reviews the law, talks to them about
why it doesn't fit within the law confines, or why it harms
consumers, and usually the practitioners readily agree to make
the change.
4:49:51 PM
REPRESENTATIVE CLAMAN asked whether it is the case that if
people have this insurance for the direct practice, they are
also required to have another layer of insurance behind that as
part of Washington's insurance coverage requirements.
MS. WEEKS GREEN replied no, it is just required that the
practices encourage people to have an emergency plan like a
high-deductible health plan.
4:50:30 PM
MS. WEEKS GREEN pointed out that Washington is seeing a changing
landscape of direct practices. She said Washington is seeing
more and more innovation and expansion into new models of direct
practice bundling with non-primary care services and bundling
and discounts on services with labs, providers, and pharmacies.
Also being seen are entities that are trying to create direct
care practice networks and network plans. An important part of
Washington law, she continued, is that Washington prevents
employer direct practice plans. Despite this, OIC receives
consumer complaints about employer based direct practice plans
and OIC has discovered many entities that are offering these
plans without being registered. When Washington's laws were
reviewed and written, these changes in technology and innovation
were not expected. Currently, OIC has received an application
for direct practice that isn't located in Washington, but it
would like to provide tele-med primary care services entirely to
consumers.
MS. WEEKS GREEN advised that it is important to note that these
innovations and expansions are not coming from registered direct
practices or networks; the consumer complaints are not about
those practices. Many of these entities have never sought OIC's
approval to operate or OIC's guidance. She said she believes
that had Washington been able to foresee these changes happening
in direct practice it likely would have set more parameters
around permissible direct practice structures. While it once
seemed like a small number of providers, it has exploded due to
innovation and technology and it is probably going to continue.
She offered her hope that this helps the committee to prepare to
address these changes and innovations in the direct practice
because it will help to preserve the model that the committee
envisions in the future.
4:52:20 PM
CO-CHAIR SPOHNHOLZ observed from the 2018 Washington report that
there were 40 practices in 2017 and 41 in 2018, but that Ms.
Weeks Green used the word "exploded" to describe the increase in
the number of participants and that doesn't sound like exploding
to her. She requested Ms. Weeks Green to explain.
MS. WEEKS GREEN responded OIC thinks there are many plans that
are operating without OIC's permission.
CO-CHAIR SPOHNHOLZ asked whether OIC is doing anything about
that.
MS. WEEKS GREEN answered that OIC is looking into it. She said
OIC gets consumer reports on a regular basis and this is the
first that OIC is learning of these other entities. She noted
OIC doesn't put consumer complaints in its report if they're not
about licensed direct practices. A lot of the complaints are
about unlicensed entities, so those numbers are not seen in the
report that OIC files with the legislature. The OIC is seeing a
lot of new models and new innovations that it hasn't seen
before, but they are not from entities that are contacting OIC.
Usually OIC is hearing about it from consumer complaints or
being notified about it from other direct practices. For OIC it
feels like an explosion because it feels like a rush, a lot of
change happening very quickly. In further response to Co-Chair
Spohnholz, she confirmed it is primarily amongst unlicensed
practices or complaints about potentially unlicensed practices.
4:54:11 PM
CO-CHAIR SPOHNHOLZ held over HB 92.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB92 Supporting Document - WA 2018 Direct Practice Report 5.1.19.pdf |
HHSS 5/2/2019 3:00:00 PM |
HB 92 |
| HB92 Supporting Document - WA Statutes 5.1.19.pdf |
HHSS 5/2/2019 3:00:00 PM |
HB 92 |
| HB92 ver E - blank sponsor substitute.pdf |
HHSS 5/2/2019 3:00:00 PM |
HB 92 |
| HB92 - Presentation from Direct Primary Coalition 5.1.19.pdf |
HHSS 5/2/2019 3:00:00 PM |
HB 92 |
| HB92 Sectional Analysis ver E 5.1.19.pdf |
HHSS 5/2/2019 3:00:00 PM |
HB 92 |
| HB92 - Testimony.pdf |
HHSS 5/2/2019 3:00:00 PM |
HB 92 |