Legislature(2017 - 2018)BARNES 124
04/15/2018 10:00 AM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB357 | |
| HB193 | |
| HB376 | |
| HB357 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 357 | TELECONFERENCED | |
| += | HB 193 | TELECONFERENCED | |
| += | HB 376 | TELECONFERENCED | |
HB 193-HEALTH CARE; BALANCE BILLING
3:31:04 PM
CHAIR KITO announced that the next order of business would be
HOUSE BILL NO. 193, "An Act relating to insurance trade
practices and frauds; and relating to emergency services and
balance billing."
LEN SORRIN, Premera Blue Cross Blue Shield of Alaska, testified
in opposition to HB 357. He paraphrased his written testimony
[included in committee packet], which reads as follows [original
punctuation provided]:
• Thank you, Chair Kito and Members of the
Committee.
• For the record, I am Len Sorrin with Premera Blue
Cross Blue Shield of Alaska.
• I am here today testifying with concerns on HB
193
• We share your commitment to ensuring that our
members are not subject to balance billing or
surprise billing by non-contracted providers. We
understand that surprise billing imposes
substantial and unexpected financial burdens on
Alaskan families, many of who are already
struggling.
• The challenge is to achieve that goal while
moderating Alaska's health care premiums and
costs, which are already among the highest in the
nation. HB 193 can achieve the goal of banning
balance billing, but it will exacerbate Alaska
health care costs and premiums as a result of its
use of the 80th percentile and 350% of Medicare
as the likely rates to be paid to providers under
the bill.
• The 80th percentile provision in the bill has
been characterized as just one of three options
in the bill. That much is true. However, the bill
requires that carriers pay the highest of the
three options. The 80th percentile will be the
highest in the vast majority of cases. And in the
rare case it is not, an even higher rate will be
mandated.
• Make no mistake: the use of the 80th percentile
as the highly likely mandatory choice for
reimbursement will increase costs for Alaskans.
Outside analyses confirm this.
• The recent study by Milliman makes clear that the
80th percentile standard has contributed to the
unsustainable level of health care costs in
Alaska. In 2015, the Alaska Health Care
Commission recommended that Alaska "consider
modifying the current usual and customary charge
payment regulation to eliminate the unintended
adverse pricing consequence."
• In addition to the problems presented by the use
of the 80th percentile standard, the Department
of Administration stated that the bill's
reimbursement structure "could encourage
providers to leave the networks and could result
in long-term growth in the cost of services."
• Our experience reflects that concern. Let me
provide you examples.
The 80th percentile regulation requires that it be
updated twice a year. This creates a cost
compounding impact that often exceeds the broader
health care cost trend, increasing costs even
further.
Premera's 80th percentile updates in 2017 resulted
in UCR trends that were over 4 times higher than
Premera's overall unit cost trend for 2017. That
drives a real escalation in overall costs,
increasing premiums and consumer out-of-pocket
expenses
The guaranty of 80th percentile reimbursement for
out of network care has also caused contracted rates
to be far higher than they would be otherwise. Our
contracted network rates in Alaska for the four
hospital-based specialties are between 32% and 275%
higher than in Washington as a percent of Medicare
... and that is on top of Medicare rates that are
already 25% higher here. Other specialties range
upward of 1000% of Medicare.
• The challenge in determining fair reimbursement
is to not disrupt what can be a very challenging
environment for health plans to build networks in
Alaska. Premera's Alaska network has grown in the
last few years and continues to do so. But it's
been very hard work, due in part to the
attraction of the 80th percentile requirement for
out-of-network care.
• That challenge can be greater when attempting to
contract with hospital based emergency care,
anesthesiology, radiology pathology, where
members are unable unable to choose their
provider. As a result, these provider types are
guaranteed to see health plan members at an in-
network hospital with or without a contract, and
hence have less incentive than providers
generally to contract with health plans.
• We want to continue our progress in building
bigger and stronger networks for our members to
access, offering members lower out of pocket
costs.
• Reimbursing out of network care at the 80th
percentile of billed charges as part of a
solution to balance billing will impede that
effort. While balance billing may be prohibited,
Alaskans will be exposed to ever-increasing out
of pocket costs as providers take advantage of
the out-of-network reimbursement levels
unencumbered by the risk of balance billing
members. Member coinsurance costs overall will be
higher when based on the 80th percentile standard
than they would when based on a more market-based
rate. Premiums will increase as well.
• We've proposed removing the 80th percentile with
three options for reimbursement standards: the
first two are the median health plan fee schedule
for the specific specialty (as is in the present
bill) and two different percent of Medicare
options. The third option we've proposed is even
simpler: it's simply the median contracted fee
schedule.
• It's hard to come up with a better indicator of
the actual health care market than one based on
the median fee schedule to which providers and
health plans have agreed. Markets are defined by
a price or term to which parties agree.
• This is an opportunity for a balance billing
solution for Alaskans to actually reflect the
market in Alaska and maintain broad and
affordable network access for Alaskans.
• We would also like to share with the committee
concerns unrelated to the reimbursement
methodology.
• First, we have suggested an amendment to the
"hold harmless" section. The provision currently
requires an insurer to "hold harmless" or ensure
that a member does not incur costs in excess of
what they owe for the in-network benefit under
the bill. Premera will of course pay claims under
the bill at the in-network benefit level and the
member's responsibility under their contract with
us will be limited to that amount. However, we
have no ability to control whether a non-
contracted provider will bill a member in excess
of the amounts allowed under the bill. We would
request that the provision be amended to reflect
that reality.
• Second, we agree with the Department of
Administration that the bill's intent is to apply
to services rendered during emergency care. We
also agree with their concern that the bill
actually reaches far beyond those services.
Separate from emergency services and emergency
medical conditions, the bill's terms extend to
any non-network provider who provides "services
at an in-network hospital or ambulatory surgical
center." That would apply to literally any
service provided by an out-of-network provider at
an in-network facility ... for example a surgical
service of any kind.
• This will result in a prohibition of balance
billing far broader than intended and will also
mandate the higher in-network benefit level
required under the bill even for consumers who
choose to see an out-of-network provider. A
prohibition on balance or surprise billing should
protect consumers who are unable to choose a
network provider and not those who are free to do
so.
• To resolve this, we suggest that "in-network
hospital" and "in-network ambulatory surgical
center" be linked only to "emergency services"
and the treatment of an "emergency medical
condition" to resolve any ambiguity on the reach
of the bill.
• The bill also provides balance billing protection
to any patient who has not consented in writing
to balance billing when being referred to an out-
of-network provider. Insurers have no way to know
whether or not a referring physician was involved
at some point, or whether a patient agreed in
writing to be responsible for the additional
costs of out-of-network care.
As a result, paying that claim correctly is
difficult if not impossible. It would also be
exceedingly rare for a referral to be involved in
emergency care.
• Finally, the bill in any form will require
changes to claims systems, changes to member
benefit structures and a range of member and
other communications. In addition, product and
rate filings for 2019 will commence very shortly.
In order to ensure that implementation is
thorough, and that the impacts of the bill to all
of these processes is well understood, we request
an effective date of plans filed or renewed on or
after January 1, 2019.
• Thank you. I would be happy to respond to any
questions you might have.
3:41:36 PM
REPRESENTATIVE WOOL said he has heard that his doctor may not
know whether he is in-network or out-of-network. He asked for
an explanation of the terms.
MR. SORRIN answered that typically a provider with Premera would
be in all of Premera's networks. He said it should be
relatively straightforward.
REPRESENTATIVE WOOL asked whether a health care provider could
be in more than one network.
MR. SORRIN answered in the affirmative. He said providers are
free to join any network.
3:43:53 PM
REPRESENTATIVE SULLIVAN-LEONARD spoke to testimony from
emergency room doctors. She asked whether they are able to join
the network with Premera.
MR. SORRIN answered that Premera would love to have every
hospital-based provider in its network. Sometimes it's not
possible as the contracting dynamic is complicated. He said at
times hospitals contract separately with some providers. He
underlined that Premera tries hard to enter into contracts with
the provider types. He added that if the consumer doesn't have
a choice, it can result in the type of balance billing that the
proposed bill is trying to prevent.
REPRESENTATIVE SULLIVAN-LEONARD asked whether Mr. Sorrin has
spoken with the bill sponsor about an amendment.
MR. SORRIN answered he had spoken with the sponsor but not about
the issue of emergency care. He said he thought the intention
is to address emergency care. He added he would be happy to
work with the sponsor.
3:46:48 PM
REPRESENTATIVE JOSEPHSON surmised the insurance company would
not be happy with the legislation for a series of other reasons.
MR. SORRIN addressed some of the concerns with the bill. He
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said the use of the 80 percentile would lead to a higher number
of out-of-network hospital-based providers. He provided an
anecdote from the state of Washington's market.
3:48:59 PM
REPRESENTATIVE KNOPP asked what leads the company to enter into
a contract with higher rates.
MR. SORRIN answered some of the high levels involve specialties
that have very few providers. He said the higher available out-
of-network reimbursement raises the level of in-network
reimbursement.
REPRESENTATIVE KNOPP stated he doesn't believe any of the
hospitals in his area are in a network. He asked why some
decide not to participate.
MR. SORRIN answered his organization attempts to have as many
hospitals as it can. He stated that in Washington around 100
out of 105 hospitals are in the network.
REPRESENTATIVE KNOPP asked what determines whether providers
enter the network.
MR. SORRIN answered that Premera works hard to enter into
contracts with hospitals in less densely populated areas.
3:52:28 PM
REPRESENTATIVE BIRCH asked whether there is objection from the
company to paying an in-network rate for a customer who has an
emergency out-of-network procedure.
MR. SORRIN answered the company does pay in those situations.
CHAIR KITO clarified the issue is paying the amount between the
in-network rate and out-of-network rate.
3:54:16 PM
REPRESENTATIVE WOOL asked for clarification regarding hospitals
versus doctors being in-network.
MR. SORRIN answered that the company contracts with the hospital
and some hospital-based providers are not employed by the
hospital. They may not have a plan that contracts with the
hospital.
REPRESENTATIVE WOOL asked whether, if the proposed bill passes,
the provider would take a loss on the billing.
MR. SORRIN answered the provider would get whatever rate the
proposed bill may end up providing. He added there are
different rates across the networks. He said that under the
proposed bill, all of the providers seen in an emergency
situation would be subject to whatever rate the HB 193
establishes.
3:57:32 PM
DR. SAMI ALI, Alaska Emergency Medical Associates, testified in
support of HB 193. She described her organization. She
corrected that physicians are not employees of the hospital, but
contract with the hospital.
4:00:07 PM
REPRESENTATIVE WOOL asked whether Dr. Ali agrees that some
providers could leave the network.
DR. ALI answered that it is hard to say, but that some may get
out of their contracts.
4:00:46 PM
RHONDA PROWELL-KITTER, President, Alaskans for Sustainable
Healthcare Costs, testified in the hearing on HB 193. She
stated some concerns with the proposed bill. She said that one
requirement of the proposed bill would be that the in-network
provider should inform the patient when another provider is out-
of-network. She queried why an in-network provider would be
responsible for tracking another provider's network status. She
said that the current version of the bill requires the highest
th
of three calculations. She said mandating the use of the 80
percentile would allow out-of-network providers to be paid at a
higher rate than in-network providers. She mentioned Oregon bill
HB 2339. She warned against unintended consequences that allow
out-of-network providers to be billed above in-network
providers.
4:04:58 PM
REPRESENTATIVE JOSEPHSON asked for the Oregon law details.
MS. PROWELL-KITTER answered the bill was HB 2339 which went into
effect on 1 March 2018.
4:05:19 PM
REPRESENTATIVE WOOL suggested she was saying that if a doctor
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who is out-of-network is reimbursed at the 80 percentile, it
could be more than that reimbursed to an in-network provider.
He suggested this could be an incentive for doctors to leave the
network.
MS. PROWELL-KITTER answered that is her understanding.
4:05:53 PM
CHAIR KITO closed public testimony on HB 193.
4:06:34 PM
REPRESENTATIVE WOOL asked whether the administration had
reviewed similar legislation in other states.
4:07:01 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community & Economic Development (DCCED), answered
questions in the hearing on HB 193. She answered in the
th
affirmative. She said the 80 percentile issue is one part of
the governor's bi-partisan approach to the health care issue.
th
REPRESENTATIVE WOOL asked whether the 80 percentile is common
in other states.
MS. WING-HEIER answered that Alaska is probably the first. She
added that the Institute of Social and Economic Research (ISER)
th
is currently conducting a study on the 80 percentile.
4:08:14 PM
REPRESENTATIVE JOSEPHSON stated he appreciates the goals of HB
193. He said it seems there is a game of "whack-a-mole" with
issues popping up.
MS. WING-HEIER answered this is a complex problem. She said the
whole health care system in the state will take time.
4:11:01 PM
REPRESENTATIVE KNOPP asked whether any benefit has been observed
in the Anchorage, Alaska, legislation to mandate health care
cost transparency.
MS. WING-HEIER answered that no benefit had been seen as yet,
but the mandate was very recent. She corrected that Central
Peninsula is in the Premera network.
4:11:51 PM
REPRESENTATIVE BIRCH asked about the financial impact to the
state.
MS. WING-HEIER answered the division wouldn't have a fiscal note
(FN) for the proposed bill. She added the Division of
Retirement and Benefits is not required to pay at the 80th
percentile.
4:13:20 PM
REPRESENTATIVE WOOL asked whether the motivation is to give the
patient a better medical bill at the end of a day.
4:14:14 PM
ANNE ZINK, Mat-Su Regional Medical Director, Alaska Emergency
Physicians, answered the goal is to prevent out-of-network
billing. She reiterated most providers in the state are in-
network. She added she did not think providers would leave the
network. She spoke to the situation in Washington and Oregon.
REPRESENTATIVE JOSEPHSON opined the state needs a single payer
system.
REPRESENTATIVE WOOL suggested if someone is an in-network
th
provider they would likely be reimbursed at the 80 percentile,
so there would be no migration to out-of-network.
th
DR. ZINK answered that is correct. She stated the 80
percentile has been in place since 2004. She said the aim is to
avoid balance billing on top of that.
4:18:11 PM
CHAIR KITO commented that balance billing has been an issue. He
mentioned individuals or families that have to file bankruptcy
due to balance bills. He said at some point there may be the
need for a task force for the state to work on the issue, but
there is no reason not to attempt to work on it.
4:20:28 PM
REPRESENTATIVE WOOL commented that the system is so complicated
that he does not know what the effect would be of moving a
single piece.
4:21:44 PM
The committee took an at-ease from 4:21 p.m. to 4:26 p.m.
4:26:28 PM
CHAIR KITO held over HB 193.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB193 Opposition Letters 4.16.18.pdf |
HL&C 4/15/2018 10:00:00 AM |
HB 193 |
| HB 193 Followup HL&C Letter 4.19.18.pdf |
HL&C 4/15/2018 10:00:00 AM |
HB 193 |