Legislature(2025 - 2026)BELTZ 105 (TSBldg)
04/02/2025 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB132 | |
| SB133 | |
| SB4 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 132 | TELECONFERENCED | |
| += | SB 133 | TELECONFERENCED | |
| += | SB 4 | TELECONFERENCED | |
SB 4-HEALTH CARE PRICES AND INCENTIVE PROGRAMS
1:54:53 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 4 "An Act relating to a health
care insurance policy incentive program; relating to health care
services; and providing for an effective date."
1:55:36 PM
SENATOR SHELLEY HUGHES, District M, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 28 said the bill creates
incentives for Alaskans to shop for health care using a price
comparison tool. She said when patients choose providers
charging less than the average price, the savings are shared
between the patient, employer, and insurer. With Alaska's high
health care costs impacting school districts, state budgets, and
families, SB 4 aims to free up dollars and help households
reduce expenses, especially important amid inflation and
declining PFDs.
1:57:14 PM
ELEILIA PRESTON, Staff, Senator Shelley Hughes, Alaska State
Legislature, Juneau, Alaska, provided the sectional analysis for
SB 4:
[Original punctuation provided.]
SB 4 Incentive Program Sectional Analysis
Section 1 Page 1, lines 4 through line 7
Adds Alaska Health Care Consumer's Right to Shop Act
as a new section to the uncodified law of the State of
Alaska.
1:57:31 PM
MS. PRESTON continued with the section analysis:
Section 2 - AS 21.06.110- Page 1, line 8 through Page
2, line 28
Adds healthcare insurance incentive program to the
list of items to be included in the director's annual
report.
(1) - (4): Mandates reporting on insurer statuses,
including financial summaries, actions on
certificates, delinquency proceedings, and
examinations of rating organizations.
(5): Requires a breakdown of receipts and expenses
within the Division of Insurance.
(6): Includes director recommendations for
statutory changes to insurance laws.
(7): Reports on health insurance market trends by
tracking policies sold and terminated.
(8): Includes a percentage of health claims that
meet existing statutory standards (AS 21.36.495(a)
and (d)).
(9): Details contributions and credits claimed
under AS 21.96.070, a section relevant to insurer
contributions to public healthcare programs.
(10): Reports public comments and division efforts
to maintain access to health insurance rate
filings. (11): Mandates an incentive program
report, covering the scope and impact of the
consumer shopping incentives outlined in AS
21.96.260.
(12): Allows for additional information the
director considers pertinent.
Section 3 - AS 21.36.100- Page 2, line 29 through Page
3, line 14
Clarifies that the incentives offered under the new
"Right to Shop" program, AS 21.96.220, are legally
permissible and not classified as unlawful rebates
under Alaska's existing insurance laws.
1:59:07 PM
MS. PRESTON continued with the section analysis:
Section 4 - AS 21.96- Page 3, line 15 through Page 6,
line 10 Adds a new section to AS 21.96 outlining the
requirements for a consumer incentive program, aiming
to make healthcare costs more predictable and
affordable by offering monetary rewards to consumers
who select cost-effective healthcare providers.
Sec. 21.96.210 A healthcare insurer shall establish
an interactive online tool so that the covered
person may request and obtain information about the
amount paid for specific healthcare services by the
insurance company to the in-network providers and
be able to compare prices among network healthcare
providers.
Sec. 21.96.220
(a) The healthcare insurance company shall develop
and implement an incentive program for a covered
person who elects to receive a service from a
provider that charges less than the average in-
network price paid by the insurer for the same
service.
(b) An incentive shall be provided by an insurance
carrier who offers a policy in a group or
individual market to a covered person for choosing
a service from a provider that charges less than
the average in-network price by way of a flat rate
or a percentage of cost savings unless the cost
saved by the insured is less than $200.
(c) An incentive shall be provided by an insurance
carrier who provides coverage under a group health
care insurance policy offered by an employer in the
amount of 33.4 percent of the costs saved by the
insurer resulting from a covered person's election
to receive a health care service from a provider
who charges less than the median of the contracted
rates recognized by the insurer for that service.
The insurer shall provide the employer with at
least 33.3 percent of the costs saved by the
insurer resulting from the covered person's
election.
(d) A healthcare insurer must provide an incentive
of at least 50 percent of the costs saved by the
healthcare insurer to a covered person under a
policy offered in an individual market.
(e) An incentive provided is not a violation of AS
21.36.100, Rebates, or an administrative expense of
the healthcare insurer rate.
2:01:25 PM
MS. PRESTON continued with the section analysis:
Sec. 21.96.230 The incentive program will be
included in all qualified plans in the state and
will provide notice of eligibility at the time of
initial enrollment or annual renewal.
Sec. 21.96.240 Before offering an incentive
program, the health insurance company shall file a
program description with the director to ensure
compliance.
Sec. 21.96.250 If consumers save money using an
out-of-network provider, their cost-sharing
payments are counted as in-network.
Sec. 21.96.260
(a) The health care insurer will provide the
director with information about the incentive
program annually. Information will include:
1) The total number of incentive payments
2) Information on the use of the incentive
program by category or service;
3) The total amount of incentive payments;
4) The average amount of each incentive payment
for each category or service;
5) The total savings achieved below the average
price of health care service in each category of
service; and
6) The total number and percentage of covered
persons participating in the incentive program.
(b) The director shall include the information in
their annual report submitted to the committee
chairs in each house of the legislature with
jurisdiction over labor and commerce.
Sec. 21.96.270
(a) Defines the types of insurance policies the
program applies, excluding certain "excepted
benefits."
(b) Explicitly includes dental and vision policies.
(c) "Excepted benefits" has the meaning given in AS
21.54.160. Sec. 21.96.300
Establishes definitions for terms in AS 21.96.210-
21.96.300,
(1) "health care insurance" has the meaning given
in AS 21.12.050;
(2) "health care insurer" has the meaning given in
AS 21.54.500;
(3) "health care provider" has the meaning given in
AS 18.23.400(n);
(4) "health care service" has the meaning given in
AS 18.23.400(n);
(5) "policy" has the meaning given in AS 21.97.900.
2:03:53 PM
MS. PRESTON continued with the section analysis:
Section 5- AS 29.10.200, Page 6, line 11 through line
13
Adds Sec. AS 29.35.142, regulation of disclosure and
reporting of health care services and price
information, to the list of home rule powers under AS
29.10.200.
Section 6- AS 29.35- Page 6, line 14 through line 27
Expands on Section 5 by specifically prohibiting
municipalities from passing laws regulating the
disclosure or reporting of healthcare price
information by providers, facilities, or insurers.
(a): Confirms that the authority to regulate
healthcare price disclosures is solely the
state's, barring municipalities from enacting
local laws.
(b): This restriction applies to all types of
municipalities, including home rule and general
law municipalities, ensuring uniform application
across the state.
(c): Provides definitions for "health care
facility," "health care insurer," "health care
provider," and "health care service" as referenced
in AS 18.23.400(n), and AS 21.54.500.
2:05:08 PM
MS. PRESTON continued with the section analysis:
Section 7- Page 6, line 28 through page 7, line 7
Directs the Alaska Department of Administration to
study and report on whether public employees covered
by state health insurance would benefit from
participating in the "Right to Shop" incentive
program. Specifically, it requires an analysis of
group health policies provided under AS 39.30.090 or
AS 39.30.091. The Department of Administration shall
complete the analysis, compile information in a report
to the legislature, and submit the report to the
senate secretary and chief clerk of the house before
January 1, 2026.
Section 8- Uncodified law- Page 7, line 8 through line
13
Amends the codified law of the State of Alaska by
adding a new section allowing the director of the
division of insurance to adopt regulations necessary
to implement this Act.
Section 9- Page 7, line 14
Sections 7 and 8 of this Act take place immediately.
Section 10- Page 7, line 15
Except for sec. 9 of this Act, this Act takes effect
on January 1, 2026.
2:06:29 PM
SENATOR DUNBAR referenced Section 5 [AS 29.10.200] and stated
that Anchorage, as a home rule municipality, already requires
providers to publish prices for their top 10 procedures. He
asked whether the proposed state law would preempt this local
requirement or if Anchorage's authority would remain protected.
2:07:19 PM
SENATOR HUGHES replied that the committee might need to hear
from legislative legal, however her understanding is future
health care price transparency laws would fall under state
authority, preempting new municipal rules. Alaska already passed
a state-level transparency law, but it has proven hard to use
and ineffective at lowering costs. She said the proposed
mechanism aims to improve usability without negating prior
efforts.
2:08:19 PM
SENATOR DUNBAR stated that he is uncertain whether Anchorage's
ordinance or a prior legislative bill required the menu of
prices, as each used a different mechanism. He said while
uniformity across the state is desired, Anchorage's ordinance
has been workable. He said his concern is whether the state law
would only apply prospectively or eliminate Anchorage's existing
provisions, which may raise his hesitancy about Section 5 of the
bill.
2:09:31 PM
CHAIR BJORKMAN expressed concern that SB 4, Section 6,
diminishes municipal health powers and asked how it conflicts
with the Right to Shop health care program.
2:10:38 PM
SENATOR HUGHES opined that Section 6, wouldn't interrupt the
mechanism. She suggested that the committee ask the same
question to the Director of the Division of Insurance.
2:11:33 PM
CHAIR BJORKMAN announced invited testimony on SB 4.
2:11:47 PM
JOSH ARCHAMBAULT, Senior Fellow, Cicero Action, Austin, Texas,
testified by invitation on SB 4 and stated that it addresses
Alaska's high health care costs by aligning incentives for
patients, providers, and insurers around value-based care. The
bill allows patients to receive deductible credits and financial
rewards when they choose lower-cost, ethically priced providers,
ending the current penalty for seeking cheaper care. He said
providers benefit from reduced administrative burdens, faster
payments, and the ability to attract more patients, particularly
in rural areas. The reform is especially beneficial for patients
with chronic conditions or large, non-emergency medical
expenses. He said by encouraging the use of lower-cost care
options, SB 4 can improve access, promote follow-up care, and
apply downward pressure on insurance premiums over time. Similar
programs in states such as Tennessee and Texas have demonstrated
success, showing that shared-savings incentives can effectively
reward cost-conscious care without compromising quality.
2:15:55 PM
SENATOR DUNBAR asked Mr. Archambault if he was aware of the
hesitancy among Alaska hospital groups regarding SB 4 and if he
knew the groups specific concerns. He also inquired about
evidence from other states on whether similar reforms have
reduced insurance premiums. He discussed Alaska's 80th
percentile rule, the perceived imbalance of negotiation power
between insurers and providers and asked Mr. Archambault's
opinion whether SB 4 would favor insurers and if cost savings
from such programs have led to lower premiums elsewhere.
2:17:20 PM
MR. ARCHAMBAULT replied that while he is not familiar with
specific hospital objections in Alaska, hospitals commonly raise
objection about reforms like SB 4, which vary by market and
hospital. He said research across urban and rural settings shows
that offering patients additional care options and rewarding
ethically priced providers can motivate 3040 percent of
patients to change behavior, leading to better access and
reduced long-term costs. Evidence from states like New
Hampshire, Kentucky, and California suggests such programs can
stabilize or reduce premiums, encourage new market entrants,
prompt high-cost providers to adjust prices, and expand direct-
pay options. He said early data indicate measurable reductions
in costs, though local results may vary due to unique market
dynamics. Overall, adding options for patients to seek lower-
cost care is seen as a net benefit.
2:21:43 PM
CHAIR BJORKMAN opened public testimony on SB 4; finding none, he
closed public testimony.
2:22:31 PM
CHAIR BJORKMAN asked Ms. Wing-Heier to share her thoughts on SB
4, Section 5 and 6, and the rationale why these sections are
included in the bill.
2:22:49 PM
LORI WING-HEIER, Director, Division of Insurance, Anchorage,
Alaska, answered questions relating to SB 4 and replied that
there are multiple layers of health care price transparency,
including state statutes, the federal "No Surprises" Act, and
local municipal requirements, but none of these are perfect. A
major challenge is that consumers often do not know these tools
exist or how to use them. For example, patients may not know the
correct procedure codes for surgeries or tests, making it
difficult to compare costs accurately. SB 4 supports greater
consumer involvement in health care decisions by providing
options and incentives to seek lower-cost care. She said
patients will still need to actively verify prices with
providers and insurers to confirm potential savings. She
emphasized that improving consumer education is essential so
that Alaskans can spend their health care dollars more wisely
and take full advantage of transparency tools.
2:24:33 PM
SENATOR DUNBAR stated that he doesn't think he's ever shopped
for healthcare providers, and he usually will go where he is
told to go. He said many people don't know what they are
shopping for and when they find a provider it may take months
and month to get in to see the provider. He asked if similar
reforms have been implemented in other states, has this issue
come up in discussions with insurance administrators elsewhere,
and what feedback is there concerning how the programs are
working.
2:26:05 PM
MS. WING-HEIER replied that she is waiting to hear back from the
other states and will give an update once she has received an
answer.
2:26:39 PM
SENATOR YUNDT expressed strong support for SB 4 and opined that
financial incentives would motivate patients to shop for their
own health care. He said he saw little risk and significant
potential benefit for Alaskans, though he flagged concerns about
unintentionally limiting local health powers. Overall, he viewed
SB 4 as a major opportunity to help residents and welcomed
further refinement through the public process.
2:27:59 PM
CHAIR BJORKMAN noted that while patients sometimes shop for
lower-cost services, limited provider access can restrict
choices. He emphasized the importance of incentivizing spending,
particularly in self-insured plans, to encourage use of lower-
cost care options instead of expensive emergency department
visits.
2:29:01 PM
CHAIR BJORKMAN held SB 4 in committee.
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