Legislature(2013 - 2014)BARNES 124
03/14/2014 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB203 | |
| HB282 | |
| HB230 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 203 | TELECONFERENCED | |
| += | HB 282 | TELECONFERENCED | |
| += | HB 230 | TELECONFERENCED | |
| += | HB 316 | TELECONFERENCED | |
HB 203-REIMBURSEMENT OF HEALTH INSURANCE CLAIMS
3:21:19 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 203, "An Act relating to payment or reimbursement
of health care insurance claims."
3:21:31 PM
JIM POUND, Staff, Representative Wes Keller, Alaska State
Legislature, stated that HB 203 makes a change in the health
care insurance policy in Alaska. It adds a step to the process
for insurers to make payments to out-of-network providers. It
requires in most cases that out-of-network providers receive
payments made out to both the patient and the provider. The
effect is two-fold. First, the patient would obtain information
on how much the procedure costs. Second, providers would
receive an incentive to become part of the network. He referred
to members' packets to the State of Alaska's health care
program, Alaska Care, to show the difference in cost between
"In-Network" and "Out-of-Network" providers that began in
January 2014. He stated that this transfers into savings for
insurers and for the patients. The goal of the bill is to
create a market basis for insurance coverage and increase
incentives for providers to become part of a network.
3:23:09 PM
LEONARD SORRIN, Vice-President, Congressional Legislative
Affairs, Premera Blue Cross, reading from a prepared statement,
stated that Premera provides coverage to over 100,000 Alaskan
residents including individuals, small groups, and large groups,
as well as offering services for large self-insured groups. He
offered support for HB 203 as a measure that is critical in
Alaska's ongoing struggle to moderate its extremely high health
care costs. Current Alaska law requires health plans to pay
non-contracted providers directly for care. This requirement
removes a significant incentive that providers have to enter
into negotiated contracts with health plans at lower rates. He
said that direct payment from the health plan is one of the
major benefits that providers obtain from contracting with
health plans.
MR. SORRIN said that HB 203 will rebalance that contracting
dynamic in Alaska by allowing health plans to issue a joint
check made out to both the member and the provider. This should
lead to more negotiated agreements with health plans which can
help moderate Alaska's health care costs. In fact, Alaska has
the second highest health care spending per capita of any state
in the nation. He provided some "eye-catching examples" which
included that Alaska has the highest average annual cost for
employee health benefits in the nation, at $11,926 per employee,
which is twice what employers in some other states pay.
Further, it is getting worse. In the last decade, health care
costs in Anchorage increased at a rate of 70 percent above the
national average.
3:25:01 PM
MR. SORRIN stated that the problem extends across the full range
of care in Alaska. He shared examples based on "Milliman's
report" which was prepared for the Alaska Health Care
Commission. This report examined costs across Alaska and
compared them to reference states. He related that physician
reimbursement in Alaska is approximately 160 percent of the
average compared to reference states of Idaho, Oregon,
Washington, and Wyoming. Cardiologists in Alaska charge an
average of 83 percent higher; hip replacement costs 350 percent
more in Alaska; and diagnostic colonoscopies cost 150 percent
more in Alaska than Washington.
MR. SORRIN said that additional data shows that certain
specialty services in Alaska are over 500 percent of Medicare
reimbursements. For example, musculoskeletal services in Alaska
are 600 percent of Medicare and cardiovascular services are 62
percent over Medicare reimbursement.
MR. SORRIN asked what the state can do about this cost crisis in
Alaska. He stated that the Alaska Health Care Commission (AHCC)
made several suggestions, including some related to pricing
power in Alaska. The AHCC recommended doing away with the
direct pay requirement. While the direct pay requirement has
certainly increased costs, these cost increases have been
aggravated by the 80th percentile requirement that mandates
health plans pay non-contracted providers at least 80 percent of
the usual and customary rate (UCR). He explained what ends up
occurring in certain communities and specialties is that
providers are able to dictate their own UCR by simply increasing
their own rates to whatever level they wish. This leaves health
plans and Alaska consumers with only the hope of a negotiated
contract as a means to moderate health care costs in Alaska. He
offered his belief that this is where a change in the direct pay
requirement would have a substantial impact on Alaska's health
care costs. For evidence, he referred to Premera's recent
experience with the Federal Employee Program (FEP) health plan
in Alaska, which he said covers a fairly healthy proportion of
Alaskan citizens. The FEP program instituted a joint check
policy in July 2012 exactly as proposed in HB 203.
3:27:45 PM
MR. SORRIN said the result of that change is that Premera Blue
Cross almost immediately saw 11 new contracts negotiated with
providers after only having one in the previous couple of
months. Further, one sole source community hospital entered
into a negotiated agreement with Premera Blue Cross after five
years of non-contracted status. This means that more consumers
have access to broader network without the risk of higher out-
of-pocket costs. He concluded that it's clear a co-payee check
system worked for FEP in Alaska and it will work in the
commercial insured market as well. He predicted that the bill
will immediately interest more providers in joining thousands of
their colleagues who have contracts with Premera Blue Cross and
other carriers across the state allowing Alaskans and employers
to access more affordable care and increasing access for
everyone. He thanked members for their time.
3:28:27 PM
REPRESENTATIVE JOSEPHSON said this is useful information to
know. He related his understanding that fundamentally this bill
is designed to send a payment to the patient rather than the
physician when the physician is not in the network.
MR. SORRIN answered yes.
REPRESENTATIVE JOSEPHSON said it seemed that in some instances
the check is written to two payees.
MR. SORRIN answered that under HB 203, the check would be made
out as a co-payee check with provider as the first payee and the
member as the second payee in every instance.
3:29:40 PM
REPRESENTATIVE JOSEPHSON asked whether the person would need to
drive to the doctor's office to obtain a signature.
MR. SORRIN answered that what typically happens is the member
will endorse the check and send it to the provider, who will
endorse it and deposit it as payment for the services.
3:30:19 PM
REPRESENTATIVE JOSEPHSON asked what happens if the patient fails
to do so and if the patient will be sued.
MR. SORRIN answered that if the consumer doesn't forward the
check, the provider would bill the consumer. He offered that in
Premera Blue Cross's view this bill will allow the company to
send the check to the person with whom they have an agreement or
the benefit contract for health care contract. These people
have purchased coverage through Premera Blue Cross. He
explained that in instances of non-contracted care, Premera Blue
Cross would send the check to the person that has an agreement
with them. These consumers should send the check on to the
provider. Typically, members would receive education on this,
but it is intended to allow patients to endorse the checks and
send them on to the provider. If not, the provider would
collect from the member. In fact, avoiding this necessity
provides exactly the type of incentive for health care providers
to enter into network contracts with health plans. He offered
his belief this should balance the contracting dynamic between
physicians and health plans in Alaska.
3:31:35 PM
REPRESENTATIVE JOSEPHSON said it sounds like at the outset it
could be a "headache" for the consumer even though Premera
believes in the long run rates will be reduced since more
physicians will subscribe to the preferred provider option.
MR. SORRIN answered yes; that the intent is to expand the range
and number of contracted providers in Alaska to provide more
people care at lower cost. He reiterated that the significant
incentive is that it is far easier and quicker for the provider
to obtain payment from Premera Blue Cross, depending on whether
the provider wants to bill the member directly or wait to obtain
the co-payee check from the member. It may or may not cause a
consumer to get billed for that cost of care, but since the
member has already received a check from Premera Blue Cross,
that if they are later billed the patient would simply forward
that check to the provider in payment.
3:32:55 PM
REPRESENTATIVE JOSEPHSON asked whether many patients would
prefer not to know except that they receive an explanation of
benefits (EOB) at the end. He asked from the consumer
perspective if this is an easier way for the payment to occur.
MR. SORRIN acknowledged that in one instance it might be easier;
however, he offered his belief that it would rob the health
plans in the health care market of a significant tool in
combination with the 80th percentile regulation. He said it
denies a significant tool to create more balanced health plan
negotiating leverage with providers in Alaska, which would lower
health care costs over time for everyone.
CHAIR OLSON remarked it is about behavior modification.
3:34:02 PM
REPRESENTATIVE JOSEPHSON said, based on his own experience, that
at the office visit, the doctor's staff informs him that his
copay is $100. He wondered what his experience will be under
this bill.
MR. SORRIN answered that he cannot predict how specific
providers may handle this; however, he hoped that rather than
asking for $7,000 at the time of service that the provider would
wait to receive the endorsed co-payee check from the member.
REPRESENTATIVE HERRON asked whether there is any opposition to
the bill.
CHAIR OLSON answered yes; that he anticipates hearing from some
testifiers.
3:35:39 PM
REPRESENTATIVE SADDLER moved to adopt the proposed committee
substitute (CS) for HB 203, labeled 28-LS0682\C, Wallace,
2/3/14, as the working document.
CHAIR OLSON objected for the purpose of objection.
3:36:09 PM
MR. POUND reviewed the changes in the proposed committee
substitute, Version C. He related Section 1 makes changes to
existing language that permits healthcare insurance payments to
be made directly to out-of-network hospitals and eliminates out
of network providers upon written request. Paragraph 5 provides
language that permits payment to an out-of-network provider by
issuing a check made out to both the patient and the provider.
He related that the network providers are called preferred
providers. He referred to page 3, Section 2, which makes
changes to existing statute that eliminates provider but
maintains hospital when it comes to direct payments. He
suggested that this narrows the definition so the funds go to
the hospital or out-of-network hospital and not to the
practitioner. He characterized these changes as a "clean up."
3:38:43 PM
REPRESENTATIVE SADDLER asked whether the purpose of Sections 2
and 3 is not to narrow the scope of medical service providers
that can receive direct payment. He asked whether it is
technical or a narrowing provision.
MR. POUND acknowledged that the language does narrow it from
providers to hospitals.
3:39:55 PM
MIKE HUMPHREY, Chief Executive Officer, The Wilson Agency,
stated that his company specializes in human resource and
benefits consulting in Alaska. He said he is testifying in
support of HB 203. He stated that he spent 20 years as the
system-wide director of benefits for the University of Alaska
(UA). In that capacity, he set the strategic direction for the
UA's benefit program, including health plans, wellness, and
retirement. The prime focus of UA and for his clients was to
help find ways to slow down the escalation of health care plan
costs, which is the biggest cost for nearly every employer.
Employers really only have about three tools to address health
care plan costs, including plan redesign - shifting costs to
employees; asking providers to join the network; and using
wellness programs to change the health status of the employees.
He said it takes three to five years for wellness programs to
show a return. His preference is to work with the medical
professionals to develop incentives for them to join a provider
network. Over the years he has held many conversations
surrounding networks and to eliminate the fear of joining he has
demonstrated the impact on top 20 procedures and illustrated the
impact on the cash flow; however, his efforts resulted in few
providers joining the network. In fact, he couldn't offer proof
of a change in the turnaround from submitting bills to insurance
and receiving reimbursement. Instead, he was offering them a
reduced reimbursement in exchange for an increase in the number
of patients. However, HB 203 has been designed to provide
incentives to encourage providers to join the network and to
help control costs.
3:43:03 PM
REPRESENTATIVE SADDLER referred to the three aforementioned
options for health care containment. He recalled that
increasing the network had the quickest turnaround. He asked
for clarification on whether that option will provide the
largest savings or if the wellness or plan redesign represents
the best option for cost savings.
MARTIN HESTER, Director, Division of Insurance (DOI), Juneau
Office, Department of Commerce, Community & Economic Development
(DCCED), answered that plan redesign has an immediate impact on
the employees but it doesn't take costs out of the health care
plan. He explained that wellness programs are a long-term
initiative to manage the population's health so the most
immediate return would be for a provider to accept a discount by
joining a network.
3:43:49 PM
JAMES BROOKS, Doctor; Executive Director, Providence Anchorage
Anesthesia Medical Group (PAAMG), stated that he is opposed to
this bill because of its impact on members' constituents and his
patients. He said that his patients have same the right to
efficient claims adjudication and remittance of payments to
providers whether they are served by a participating provider or
a non-participating provider. These patients should also be
afforded the same rights as hospitals that are staffed with
teams of health care professionals to process claims and
payments. The entire health care industry is implementing
electronic health records, electronic claims submission, and
being paid with electronic remittance to reduce costs and
complexity of care for the patients. This proposed bill, HB
203, will use a two-party paper check system for remittance of
monies due to providers. He said, "To me, this defies logic."
He offered his belief that HB 203 will increase the complexity
of payment for services. Patients will now have to act to
convey a check from themselves to the providers of services.
Patients with guardians, surrogates, and other third parties
assisting in their care may struggle to get the process
accomplished. This process will initially confuse some
patients, as was testified to earlier and it would definitely
increase the amount of paperwork and the communications
necessary after having received health care. He stressed that
it would also delay reimbursement from patients to providers.
Once it delays reimbursement and increases the accounts
receivable cycle, it will elevate costs. As it elevates costs
some providers may "sign networks" but other providers will pass
the cost on to others. He also said, "Frankly, I just think it
is bad legislation; it's illogical legislation, and it's a step
back to how business was done 20 or 30 years ago." However,
it's not the pattern for increasing efficiency in the whole
business side of health care. He argued that this bill imposes
a risk of failure on patients and if patients are out of town
for any number of reasons and don't process their mail they will
risk having payments due to a provider sitting somewhere or be
lost. Yet the patients will ultimately still be responsible for
the payments. He concluded that this bill shifts the burden to
patients and to constituents in order to benefit an insurance
network. He thanked members for the opportunity to testify.
3:47:02 PM
REPRESENTATIVE JOSEPHSON commented that when he thinks of a
company such as Premera Blue Cross, he is unsure whether he is
dealing with a corporation with a profit motive or a coop. He
said if he knew this it would assist him in determining how he
feels about this bill.
CHAIR OLSON responded that question is not part of the bill
before the committee at this time; however, he suspected someone
could provide him with that information.
3:47:45 PM
REPRESENTATIVE SADDLER understood him to say this will move the
state backwards to using checks, but that electronic health
records (EHR) is the trend. He asked whether EHR currently
envision solely electronic transfer of payments between patients
and insurers.
DR. BROOKS answered that the [PMAAG] currently has electronic
health records. Currently, PMAAG submits the vast majority of
their claims electronic so no paperwork is processed by most
entities or payers. Finally, most insurance companies
electronically remit payments and these payments are posted. He
emphasized that this process is totally transparent to his
patients. He reported that he is a participating provider with
[Premera] Blue Cross Blue Shield (PBCBS). He said that if every
company operated as PBCBS does that he wouldn't be concerned
with much of the bill; however, other insurance companies do
business in this state and "let's just say they are very
corporate." Thus some insurance companies have a "bottom line"
incentive in terms of how this check process will work. Every
company doing business in this state is not Premera Blue Cross
Blue Shield and is not represented by [patients] testifying
today. Some insurance companies are already sending out paper
checks and defying the state's law. He indicated he became
aware of this since some of his employees receive these checks
to be used to pay for their services and it is already affecting
providers. He said, "I think you can't take a quality company
like [Premera] Blue Cross Blue Shield and assume that everybody
that's doing business in this state is going to operate the way
Jeff Davis and his team of people would operate." He surmised
other companies operate in Alaska who may be far less ethical.
3:49:46 PM
REPRESENTATIVE SADDLER asked whether he is a member of the
PBCBS.
DR. BROOKS stated that he does not have any economic "skin in
the game" when it comes to PBCBS. He emphasized that there are
a lot of other insurers in this state that he would not sign a
contract with for anything, not because of economics, but due to
the horrible terms imbedded in their contracts.
REPRESENTATIVE SADDLER understood he is a participating member
of PBCBS. He understood he is a network provider. He asked
whether he is required to submit claims electronically.
DR. BROOKS agreed he is a network provider. He was unsure of
whether he is required to submit claims electronically, but that
is how he does business with them and PBCBS remits payments
electronically back to the Providence Anchorage Anesthesia
Medical Group (PAAMG).
3:50:38 PM
REPRESENTATIVE HERRON said he believes he understands his
concern. He said that what's being proposed is a paper process.
He asked whether within the electronic transfer a system could
be developed in which the patient must electronically
acknowledge that "this is true" and the care provider would then
be paid. He asked whether PAAMG would prefer that method.
DR. BROOKS was unsure of how that process would work. He said
that PAAMG receives hundreds of payments for hundreds of
different patients sent by different providers, including
Medicaid, Medicare, and PBCBS, among others. These payments are
posted in a mass production method. He was unsure how this
would function if he must wait for every patient to
electronically sign for the payments. He reported that PAAMG
takes care of numerous patients that don't even know how to use
e-mail, who will struggle to contend with another step in the
process. He indicated that the legislature authored the Health
Care Decision Act. The legislature is aware that guardians and
surrogates currently act on behalf of patients with limitations.
He was unsure about complicating the process for these patients
and how they would deal with the additional process.
3:52:33 PM
CHAIR OLSON asked him to assess the impact of HB 203 on his
"back office staffing."
DR. BROOKS said that [the proposed bill] would cost money since
it will require him to "chase patients" to bring him one payment
at a time and sign off on it. He anticipated he would need more
staff. For example, currently, significant problems exist with
payment of claims and processing of claims by Medicaid. He has
already had to expand his staff to contend with the problems.
When a health care financial cycle changes because the process
changes, like rolling out a new information system, they are
putting another step in the process, it will cost the providers
of the state money. He indicated that PAAMG is on par with
PBCBS. He said, "I promise you many other practices will have
to hire more people to deal with this and chase down patients
and try to get the check either mailed in or brought to the
office and get them signed appropriately."
3:53:43 PM
RICK WATSON, Chief Executive Officer, Orthopedic Physicians
Anchorage, stated that Orthopedic Physicians Anchorage (OPA)
consists of a group of 31 providers specializing in orthopedic
surgery and rheumatology in Anchorage. Most of the orthopedic
surgeons in Alaska, including his group, are non-contracted out
of network providers. The OPA has no contractual relationships
with commercial insurance carriers. Our concern with HB 203 is
primarily for the effect it will have on patients. When
patients come to the OPA for care, OPA offers to verify their
insurance benefits, obtain required pre-authorizations for them,
file claims with their insurance company for them, and notify
them when their insurance pays. He said, "We do this as a
courtesy." Insurance companies refuse to tell OPA what will be
paid in advance so OPA provides patients estimates and explain
the actual amount that they will owe will be unknown until the
insurance company pays. He acknowledged that patients are
understandably frustrated by this process and readily assign
their insurance benefit payments to OPA so insurance companies
will pay OPA directly so they do not have to deal with it.
3:55:29 PM
MR. WATSON stated that payments on claims are frequently delayed
for long periods as insurance companies routinely request more
and more information. Patients and insurance companies have
come to expect this from providers "even those of us who are not
contracted with them." Consequently almost no patients
understand this process or are prepared to do it on their own.
As a courtesy OPA deals with the providers to spare patients the
time, the frustration, and the worry, so they can focus on
getting better. He indicated that OPA consistently finds that
patients don't understand their insurance policies or the
contractual relationship they have with their insurance company.
Many patients mistakenly think that the insurance company will
pay it all and they will owe nothing. He said, "We are
dumfounded why insurance companies make so little effort to help
their enrollees understand these things and expect us to do the
explaining. We shudder to think what would happen to patients
if we billed them 100 percent direct and if they had to file
their own claims, and get their own preauthorizations and try to
get reimbursed." He offered his belief that HB 203 proposes to
strip patients of their right to assign insurance benefits to
their physicians by allowing insurance companies to write checks
to both the patient and the non-contracted provider, require co-
signatures on those checks and not require formal assignment of
benefits. Further, HB 203 makes the State of Alaska complicit
in misleading patients to think that a formal contractual
relationship exists between their insurance company and their
non-contracted providers when one does not exist. He offered
his belief that this will further confuse patients.
MR. WATSON said, "As referenced earlier by Mr. Sorrin, several
months ago federal Blue Cross stripped patients of their right
to assign benefits to their non-contracted providers." All
reimbursement checks are now sent directly to the patient and
not the provider as HB 203 proposes. Many of those patients
still don't understand why they are receiving those checks.
Many hold them not knowing what to do. Some patients misplace
the checks while others sense a windfall and cash the checks and
spend the money. When the bill arrives the patient no longer
has the funds to pay their physician. As a consequence of this,
non-contracted providers were forced to require up to 50 percent
advance deposits from those patients. He expressed concern that
with HB 203, many more patients will not have means to afford
such deposits and their care will be delayed. He related that
OPA has other concerns with HB 203. For example, if the
insurance company overpays he asked whether the patient will be
required to cosign the reimbursement check in the same way they
did with the initial payment. If the insurance underpays, will
the patient need to become involved to "make it right." He
asked for the reason that it is important to preserve patient
rights, to assign benefits to hospitals, but not their physician
or a surgery center. He offered his belief that HB 203 drives
another wedge between patients and their non-contracted
providers. It further increases patient confusion, draws
patients into administrative role they clearly don't want,
understand, or are prepared to take. Finally, it imposes a
financial risk on patients that could delay their care and
increase their debt. He thanked members for listening.
3:59:03 PM
CHAIR OLSON removed his objection. There being no further
objection, Version C was before the committee.
[HB 203 was held over.]
3:59:37 PM
The committee took a brief at-ease.