Legislature(2021 - 2022)BELTZ 105 (TSBldg)
03/14/2022 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB185 | |
| SB41 | |
| SB190 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 185 | TELECONFERENCED | |
| += | SB 41 | TELECONFERENCED | |
| += | SB 190 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 41-HEALTH INSURANCE INFO.; INCENTIVE PROGRAM
2:05:16 PM
CHAIR COSTELLO announced the consideration of SENATE BILL NO. 41
"An Act relating to health care insurers; relating to
availability of payment information; relating to an incentive
program for electing to receive health care services for less
than the average price paid; relating to filing and reporting
requirements; relating to municipal regulation of disclosure of
health care services and price information; and providing for an
effective date."
She noted that this was the third hearing and there was an
amendment for the committee to consider. She asked Mr. Whitt to
refresh the committee's recall of the bill.
2:05:48 PM
BUDDY WHITT, Staff, Senator Shelley Hughes, Alaska State
Legislature, Juneau, Alaska, summarized that SB 41 incentivizes
people to find in-network or out-of-network providers who can
save the insured and insurer money. He noted that the greatest
savings typically would be from out-of-network providers since
in-network providers generally negotiate rates that are similar
across the provider network. This has been implemented in
several other states and the sponsor believes would be a
productive policy for Alaska to consider.
CHAIR COSTELLO asked if the states that have similar legislation
have reported on realized savings.
MR. WHITT said there isn't much data since this is a relatively
new program, but he would look at the available analyses and
provide that information to the committee.
2:08:56 PM
SENATOR MICCICHE moved to adopt Amendment 1 to SB 41, work order
32-LS0247\I.2.
32-LS0247\I.2
Marx
3/4/22
AMENDMENT 1
OFFERED IN THE SENATE
TO: CSSB 41(L&C), Draft Version "I"
Page 4, line 10, following "regulation.":
Insert "Except as provided in (e) of this section, the
total amount of incentive payments a health care insurer
provides to a covered person in a calendar year under this
subsection may not exceed the amount of the covered
person's cost sharing in the calendar year by more than
five percent."
Page 4, line 15:
Delete the first occurrence of "of"
Insert "as provided in this subsection. Except as
provided in this subsection and (e) of this section, the
incentive a health care insurer provides the covered person
must be"
Page 4, line 18, following "service.":
Insert "Except as provided in (e) of this section, the
incentive a health care insurer provides to a covered
person in a calendar year under this subsection may not
exceed the amount of the covered person's cost sharing in
the calendar year."
Page 4, following line 24:
Insert a new subsection to read:
"(e) For a dental insurance policy or a vision
insurance policy, the incentives a health care insurer
provides to a covered person in a calendar year may
not exceed the amount of the dental benefits or vision
benefits provided to the covered person under the
dental insurance policy or the vision insurance
policy."
Reletter the following subsection accordingly.
Page 6, following line 10:
Insert a new paragraph to read:
"(1) "cost sharing" means a deductible,
coinsurance, copayment, or similar expense owed
by a covered person under the terms of the
covered person's health care insurance policy;"
Renumber the following paragraphs accordingly.
CHAIR COSTELLO objected for an explanation.
2:09:05 PM
SENATOR MICCICHE stated that the amendment addresses his concern
with the original version of the bill that people could be well
compensated for making poor decisions about who would provide
the medical care for specific procedures. The amendment would
provide the insured who shops around a benefit of five percent
more than their out of pocket costs. The amendment does not
incentivize people for making potentially damaging decisions
based on the profit that was available.
CHAIR COSTELLO asked for a detailed explanation of what the
amendment does and an example of the profit potential in the
earlier draft of the bill.
2:11:07 PM
SENATOR MICCICHE explained that the earlier version allowed the
covered person to receive 30 percent of the savings, which
potentially could have been tens to hundreds of thousands of
dollars more than the cost of the medical procedure. The
amendment clarifies that the insured will be paid five percent
more than their out-of-pocket costs. He provided a personal
example to demonstrate the profit potential without the
amendment. One of his daughters had a heart condition that was
monitored for a year. When it was determined that treatment was
necessary, he and his wife shopped around for the most cost
effective option. The right medical care at the right time was
the primary concern. However, if the original version of the
bill had passed, he could have pocketed $16,000. He posited that
some families may make a less than responsible choice for the
best medical outcome if they know that a particular choice will
put $16,000 in their pocket.
2:13:30 PM
SENATOR STEVENS asked where the money for the incentive comes
from.
SENATOR MICCICHE offered his understanding that it is money that
the insurance company would not longer need to pay. He deferred
further explanation to the sponsor.
2:14:15 PM
At ease
2:14:46 PM
CHAIR COSTELLO reconvened the meeting and asked Mr. Whitt to
respond to Senator Stevens' question.
2:15:13 PM
MR. WHITT explained that the savings is shared either 50/50
between the insured and the insurance company or three ways
between the employer who pays for the insurance, the insured
employee who sought the medical treatment, and the insurance
company. Regardless, the insurance company pays the incentive.
SENATOR STEVENS asked how the bill affects Medicare.
2:17:52 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), Anchorage,
Alaska, explained that Medicare, Medicaid, Alaska Care, and
union trusts would not be affected should the bill become law.
SB 41 would only apply to insured plans that fall under Title
21, which is just 18-20 percent of the state.
SENATOR STEVENS asked if deductible payments would be affected.
MS. WING-HEIER replied deductible payments are part of the out-
of-pocket maximum. Should the bill pass, the most an insured who
uses the incentive could receive is five percent more than their
total out of pocket maximum.
CHAIR COSTELLO said the underlying concept is good, but it
doesn't seem to improve cost transparency because the insured
probably won't know the total cost of a procedure until months
after it happened. Should the bill pass, she said a patient will
have to try to extract the information about cost from the
physician's office and share that with the insurance company.
She wondered whether another bill might be needed to address
transparency.
2:20:49 PM
MS. WING-HEIER acknowledged that there will be a learning curve.
For example, somebody who is having a knee replaced might call a
second facility to compare price, but they would also have to
look at the cost of the surgery center, the anesthesiologist,
and the other doctors that might be involved. The insurance
companies will have to work with the policy holders to look at
all the costs because a savings in one area might be offset by a
higher cost in another. Further, it adds to the cost if the
surgery is more complicated than anticipated. She noted the
federal legislation that requires providers to give consumers
good faith estimates, but warned that it will be the consumer's
responsibility to get cost estimates for all the different parts
of the procedure.
SENATOR MICCICHE expressed concern that a provider may give an
estimate that is based on a best case scenario and the consumer
might make a decision that results in complications that lead to
much higher medical bills later on. He posited that SB 41 might
not do what it's purported to do. He said Amendment 1 eliminates
just one of the many concerns he has with the bill.
2:24:45 PM
CHAIR COSTELLO said she would like to finish working on the
amendment.
SENATOR GRAY-JACKSON asked when she should raise questions
unrelated to the amendment.
2:25:05 PM
At ease
2:25:52 PM
CHAIR COSTELLO reconvened the meeting and removed her objection
to Amendment 1. Finding no further objection, Amendment 1 was
adopted.
SENATOR GRAY-JACKSON asked if AlaskaCare is a self-insured plan.
MS. WING-HEIER answered yes
SENATOR GRAY-JACKSON offered her understanding that SB 41 would
affect only those insurance plans that are not self-insured.
MS. WING-HEIER agreed.
SENATOR GRAY-JACKSON posed a hypothetical example of somebody
who shops for a procedure and selects an option that saves
$16,000. She asked why the savings are split.
MS. WING-HEIER explained that when the insurance company
receives half of the $16,000 savings, the overall cost of health
care goes down by $8,000. The notion is to encourage the insured
to shop for providers that can do the procedure for less than
the network plan.
SENATOR GRAY-JACKSON asked for further clarification on the
savings.
MS. WING-HEIER replied the only savings in the example is the
$8,000 that the insured doesn't have to pay the provider.
SENATOR GRAY-JACKSON continued to question the savings.
MS. WING-HEIER replied this is new territory, but the division
will do its best to ensure it works for both consumers and
insurance companies, should the bill pass.
2:30:01 PM
SENATOR STEVENS asked if Aetna would receive any benefit if it
were able to reduce the price of a procedure.
MS. WING-HEIER explained that in an employer sponsored plan, the
savings would be split three ways between the employer, the plan
sponsor, and the employee. In the example, the employer and the
insurance company are the same because Aetna administers the
plan for the state. She assumed that Aetna is paid on a per
person per month charge.
SENATOR STEVENS commented that he was now confused at a higher
level.
2:31:38 PM
SENATOR MICCICHE clarified that in the personal example he gave,
the $16,000 would have been his share as the insured so it saved
the state $48,000. He said he understands the concept in theory
but he struggles with it philosophically because he believes
people should make choices for the best medical outcome at the
lowest cost possible.
2:32:29 PM
CHAIR COSTELLO questioned whether the bill might drive increased
medical tourism and if that is happening in states that passed
similar legislation.
MR. WHITT said he had anecdotal data that people crossed the
state line to seek treatment when New Hampshire passed similar
legislation. He also shared that the sponsor traveled to Idaho
for a major medical procedure and that drastically reduced her
out of pocket in-network savings.
MR. WHITT addressed the earlier question about transparency,
noting that Ms. Wing-Heier pointed out that federal legislation
passed and was being implemented about transparency and giving
people information about the cost of procedures. He directed
attention to the provision in Section 4 that stipulates that
insurance companies operating in the state must provide a
mechanism by which insured persons can see the cost of medical
procedures.
MR. WHITT maintained that the bill would not incentivize people
to select lower quality care. Rather, it would incentivize a
shopping mentality for more affordable care. The bill simply
says that when the playing field is even and there is a drastic
difference in pricing, Alaskans should be able to realize some
of the savings that an insurance company would receive for
selecting the lower cost option.
2:39:15 PM
CHAIR COSTELLO opened public testimony on SB 41.
2:39:43 PM
ED MARTIN JR., representing self, Kenai, Alaska, said he likes
that SB 41 talks about transparency in getting cost information
about medical procedures. He offered his belief that medical
procedures in this state are too costly and he and his wife
likely would travel out of state to seek less expensive options
since they have never purchased insurance under the Affordable
Care Act. He opined that "there shouldn't be a profit margin
when it comes to health," regardless of whether it's the
individual, the insurance company or the doctors. He asserted
that the number of specialists throughout the country was out of
control. He recalled the time when children were born in Palmer
at the Valley Hospital for $350. Regarding the bill, he said
disclosure is fine, but the profit section is too complicated.
"If anybody should profit from it, it should be the
individuals." He said he didn't care about the insurance
companies and he will travel outside to receive health care
because costs are too high in this state and it is the
legislature's fault for not getting rid of Certificate of Need
and allowing competition.
CHAIR COSTELLO thanked him for his testimony and clarified that
if the bill were to pass, the savings would be shared with the
insured person.
2:42:51 PM
BETHANY MARCUM, Chief Executive Officer (CEO), Alaska Policy
Forum, Anchorage, Alaska, offered suggested changes and
recommendations during the hearing on SB 41. She read the
following testimony:
Price transparency is an essential component of
markets that work, but health care is not most
markets. Its pricing system is extremely complicated
and one primary reason for this complexity is the
presence of third-party payers for routine care. In
most market transactions, payment is made from the
person or entity receiving the good or service to the
entity providing the good or service. In those
instances, consumers typically shop around for the
best product or service at the best price. But some
form of health insurance, either private or government
provided has become the middle man in nearly all the
health care transactions today. Some patients only
receive services, but most do not directly pay for
services; instead paying for insurance premiums,
copays, or deductibles. Patients have much less
incentive to shop for the best service at the best
price. In fact, most Americans don't shop for health
care services in our current environment. So while
transparent pricing for health care services is
important, this alone will not have a significant
effect on the market as long as third-party payers are
involved. We have evidence of this from transparency
initiatives, which have occurred in other states.
MS. MARCUM continued to read:
Our 2020 report found that Alaska health care
expenditures per capita has grown significantly faster
than the national average over the past 30 years and
are now higher than every other state. In order to
bring down these costs, Alaska must create a
competitive marketplace. To truly make a difference in
our third-party payer health care system, three key
elements must be included.
First, is that for patients to make true price
comparisons, they must know what their own insurance
plan pays for the service. California implemented a
payers' bill of rights years ago and that required
disclosure of charge master rates. But later studies
found little to no observable effect on the end
result. So listing the undiscounted price or even an
out-of-pocket estimate is not sufficient to give
consumers the information they need to make life
choices.
The second and most important element is an incentive.
I mean, after all if only your insurance company
stands to gain from a patient choosing a lower cost
provider, why would patients do the extra footwork to
shop around? However, if they personally get a cut of
the savings, patient engagement with transparency
tools has shown to increase elevenfold. So some kind
of shared savings program is a vital component of any
transparency initiative. Some have expressed concern
that such an incentive program would push patients to
always choose the lower-cost provider and thus affect
quality and outcomes. But that surely presumes that
Alaskans are not smart enough to balance cost with
quality or to make their own health care decisions in
direct consultation with providers.
MS. MARCUM continued to read:
The final required element is loosening restrictive
in-network requirements. If patients are only
encouraged or incentivized to shop around within the
network, the network providers may keep costs high
knowing they have a captive audience. Patients should
be allowed to use lower priced services outside the
network if they so choose.
Lastly I would like to make a couple of specific
policy recommendations:
1. A provision should be included for a discounted
cash price to also be disclosed by providers and
facilities.
2. Language should be added to establish that
insurers cannot deny referrals to in-network
providers from out-of-network providers if the
patient went there for a lower cost.
3. All the federal rules that have been enacted in
the last five years related to price transparency
should be codified into this bill. And that is
regarding federal regulations 26, 29, and 45.
MS. MARCUM thanked the committee for the opportunity to testify.
2:46:51 PM
CHAIR COSTELLO closed public testimony on SB 41.
She asked the committee if there were any comments on the
suggested changes.
SENATOR REVAK said he would like the sponsor to comment on the
suggestions and recommendations.
2:47:24 PM
MR. WHITT pointed out that insurance companies that participate
in the incentive would be required to report the number and
amount of the incentives they paid, and the department would
also be required to submit a report to the legislature so
changes could be made to the program if they were needed.
Responding to the public testimony, he clarified that the
majority of individuals in the state who are insured through the
individual market with healthcare.gov don't pay anything for
insurance. For those people, the result of Amendment 1 is they
have no incentive to shop for a lower cost procedure. Their
incentive is limited to five percent above out-of-pocket costs,
and they have no out-of-pocket costs to recoup.
MR. WHITT restated that the sponsor believes SB 41 is good
policy. It has the potential both to bend the curve on health
care costs and change the minds of Alaskans about how to look
for health care.
2:49:25 PM
At ease
2:51:09 PM
CHAIR COSTELLO reconvened the meeting and recognized Senator
Micciche.
2:51:20 PM
SENATOR MICCICHE said he felt compelled to respond to Ms.
Marcum's comment that concerns about the incentive program as
initially drafted presumes that Alaskans are not smart enough to
balance cost and quality and make a good health care decision.
He said he believes Alaskans are smart enough to make good
choices whether they're paying the bill or not. His concern was
specifically focused on the cash incentive.
2:52:07 PM
CHAIR COSTELLO held SB 41 for future consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 41 Amendment I.2.pdf |
SL&C 3/14/2022 1:30:00 PM |
SB 41 |
| SB 190 Version I.pdf |
SL&C 3/14/2022 1:30:00 PM |
SB 190 |