Legislature(2025 - 2026)BUTROVICH 205
02/11/2025 03:30 PM Senate HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| SB60 | |
| SB83 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 60 | TELECONFERENCED | |
| *+ | SB 83 | TELECONFERENCED | |
SB 83-TELEHEALTH REIMBURSEMENT RATES
4:14:49 PM
CHAIR DUNBAR reconvened the meeting and announced the
consideration of SENATE BILL NO. 83 "An Act relating to health
care insurance; relating to insurance reimbursement for health
care services provided through telehealth; and providing for an
effective date."
4:15:08 PM
SENATOR MATT CLAMAN, District H, speaking as sponsor of SB 83
introduced the legislation:
[Original punctuation provided.]
Thank you Chair Dunbar and members of the Senate
Health & Social Services Committee. For the record
this is Matt Claman, Senator for District H in West
Anchorage.
Senate Bill 83 was brought forward by health care
providers in my district who provide both in-person
and telehealth services to Alaskans across the state.
SB 83 will ensure pay parity for telehealth, requiring
health care insurers to reimburse at the same payment
rate for telehealth services as in-person care.
Telehealth reduces barriers to care and allows
patients to receive timely and convenient care from
the comfort of their own homes. In Alaska, barriers to
care affect individuals in rural areas, those with
disabilities, and those with limited transportation
options. Telehealth is especially important for
chronic disease management, mental health services,
and preventative care.
The COVID-19 pandemic highlighted the critical need
for telehealth access, prompting the Centers for
Medicare & Medicaid Services (CMS) to temporarily
implement telehealth parity. While this federal
mandate has expired, some telehealth provisions remain
in place. What was once a temporary need is now
standard practice, and many states have made efforts
to solidify permanent access to these services. Over
33 states have enacted similar legislation to SB 83 to
ensure fair reimbursement for telehealth services.
Alaska's Medicaid program already has telehealth pay
parity. This legislation builds upon that existing
framework to require the same parity by private
insurers. Passage of this legislation will expand
access to care, improve and maintain quality of care,
and incentivize continued telehealth utilization.
4:16:50 PM
SARENA HACKENMILLER, Staff, Senator Matt Claman, Alaska State
Legislature, Juneau, Alaska, Provided the sectional analysis for
SB 83.
Senate Bill 83
Sectional Analysis Version N
Section 1 AS 21.42.450. Coverage for telehealth.
Establishes a new section requiring health care
insurers to reimburse health care providers for
telehealth services at the same rate as for in-person
services.
Section 2 AS 21.42.599. Definitions. Adds new
paragraph (9) for the definition of "telehealth" as
given in AS 47.05.270.
Section 3 AS 29.10.200. Limitation of home rule
powers. Adds new paragraph (68) "AS 29.20.420 (health
care insurance plans)" to the list of provisions which
apply to home rule municipalities.
Section 4 AS 29.20.420. Health care insurance plans.
Establishes a new section requiring a home rule or
general law municipality offering a group health care
insurance plan to meet the requirements of AS
21.42.450 (Section 1). Provides the definition of
"health care insurance plan" as given in AS 21.52.500.
Section 5 AS 39.30.090(a). Adds a new subsection (13)
requiring a policy or policies of group insurance
covering state employees and other specific employee
groups under the Department of Administration to meet
to the requirements of AS 21.42.450 (Section 1).
Section 6 AS 39.30.091. Authorization for self-
insurance and excess loss insurance. Amends this
statute to require those employers with a self-insured
group health insurance plan covering active state
employees to meet the requirements of AS 21.42.450
(Section 1).
Section 7 AS 21.42.422(b)(2). Coverage for telehealth.
Subsection (b), paragraph (2) is repealed.
Section 8 Establishes an effective date of July 1,
2025.
4:19:09 PM
SENATOR TOBIN asked what SB 83 repeals on page 5, line 2.
4:19:36 PM
MS. HACKENMILLER replied that Section 7 updates a definition and
in Section 2 points to a different statute.
SENATOR TOBIN asked for the definition.
MS. HACKENMILLER provided the definition of AS 47.05.270(e), "In
this section, "telehealth" means the practice of health care
delivery, evaluation, diagnosis, consultation, or treatment,
using the transfer of health care data through audio, visual, or
data communications, performed over two or more locations
between providers who are physically separated from the
recipient or from each other or between a provider and a
recipient who are physically separated from each other.
4:21:02 PM
SENATOR HUGHES recalled that during the COVID-19 pandemic,
legislation addressed telemedicine by allowing its use and
possibly establishing payment parity. She expressed uncertainty
about whether the change long-term. She asked if anyone could
clarify what was ultimately decided.
SENATOR CLAMAN stated that he did not specifically recall what
was decided regarding telehealth under COVID-19 regulations but
offered to follow up. He noted that a telehealth bill sponsored
by Representative Spohnholz passed recently and described it as
the first significant telehealth legislation from the last
session. He mentioned that his office had introduced a related
bill focused on specialized care through coordinated care teams
for individuals with amyotrophic lateral sclerosis (ALS) and
similar disabilities. He characterized SB 83 as a follow-up or
adjustment to earlier telehealth legislation and part of broader
efforts to promote medical innovation and cost savings.
SENATOR HUGHES expressed concern about the cost structure of
telehealth services. She stated that while telehealth was a
valuable innovation during COVID-19providing convenience,
access, and the hope of affordabilityshe is disappointed it has
not lowered healthcare costs as expected. She emphasized that,
unlike in-person visits with higher overhead costs such as
staff, facilities, and maintenance, telehealth appointments
require fewer resources. She questioned why telehealth services
are being reimbursed at the same rate as in-person care and
urged further explanation to help her understand the
justification for payment parity.
4:24:47 PM
SENATOR CLAMAN stated that invited testimony would be provided
by economist Dr. Rebitzer who authored the book "Why Not Better
and Cheaper?" He said Dr. Roberts is better qualified to address
the question.
4:25:10 PM
CHAIR DUNBAR announced invited testimony on SB 83 and asked that
testifiers keep in mind the question regarding telemedicine
costs. He said he would also like to know which states have
addressed telehealth similar to SB 83.
4:25:55 PM
JAMES REBITZER, Professor of Economics, Management and Public
Policy, Boston University, Boston, Massachusetts, testified by
invitation on SB 83 and said:
[Original punctuation provided.]
My name is James Rebitzer and I am the Peter and
Deborah Wexler Professor of Economics, Management and
Public Policy at the Questrom School of Business,
Boston University. I am also a Research Associate at
the National Bureau of Economic Research.
My area of research and teaching is primarily in the
area of health economics. In addition to teaching
university classes in applied microeconomics,
managerial economics and health economics, I have
published many academic papers about the economics of
the U.S. healthcare system. I also recently published
a book on innovation in healthcare published by Oxford
University Press. It is called Why Not Better and
Cheaper? Healthcare and Innovation.
I am here to testify about a new piece of legislation
regarding reimbursement for telehealth services. The
bill requires a health insurer to reimburse for
telehealth services on the same basis and at least at
the same rate as comparable healthcare services
provided in person.
Let me begin with my conclusion: This is a reasonable
piece of legislation worthy of your support. However,
my reasoning may be of more interest to the committee
than my conclusion.
As an economist who studies management, I normally
don't think that a state legislature should determine
how much private insurers contract to pay for
services. As a rule, legislatures lack key information
and incentives and move too slowly to set relative
reimbursement rates. Better to leave that to
negotiations between insurers and providers. However,
telehealth may be the exception that proves the rule.
Mandating equal payment can help solve an economic
problem that private parties can't solve on their own.
Like every new treatment modality, telehealth requires
providers to develop new capabilities to deliver
distant care. Payers may be willing to pay something
to induce providers to make these costly investments,
but will they pay enough on their own? Maybe not. In
our fragmented payment system, each provider treats
patients from many different payers: Medicare,
Medicaid, The State of Alaska, Private Insurers,
Private Employers. And this diversity of payers
creates the opportunity for free-riding.
4:28:41 PM
MR. REBITZER continued his testimony:
Suppose a provider deals with 10 different payers,
each paying $50 for a telehealth visit. Suppose
providers are happy to invest adequately in telehealth
capacity at this price. What would happen if one payer
decided to pay $40 for a telehealth visit? Providers
might still be willing to deliver telehealth care to
this payer because they have already borne the upfront
cost of developing the telehealth capacity. The
insurer who pays $40 would, in effect, be "free-
riding" on the other payers' generosity. That would be
annoying to the other payers. If the rest followed
suit, the result would be an inadequate investment in
telehealth capacity or, in the extreme case, no
investment at all.
You can see where this is going. The proposed bill can
help because it makes it harder for a single insurer
to free-ride on other payers because it makes it more
costly to cut rates on telehealth. There is no
guarantee that the "parity" required by the bill gets
relative telehealth reimbursements exactly right, but
it makes free-riding less likely. Since the cost of
delivering telehealth care is partly determined by
what else providers could do with their time, parity
also has the advantage of not making telehealth more
expensive relative to in-person care.
4:30:10 PM
MR. REBITZER continued his testimony:
Although I am not an Alaskan, I am impressed by the
vast distances healthcare providers must travel to
reach all Alaskans. The cost of underinvestment in and
under provision of telehealth is especially severe for
Alaska, so the proposed legislation's value is likely
to be high.
4:30:40 PM
SENATOR HUGHES questioned the claim that providers must make
costly investments in telehealth capacity. She stated that most
clinics already have broadband and secure systems, which are not
comparable to purchasing expensive medical or surgical
equipment. She argued that parity concerns should focus on
consistency among telemedicine payers rather than equating
telemedicine with in-person visits, since the two have different
costs and overhead. She concluded that she remained unconvinced
by the reasoning for payment parity between telemedicine and in-
person care, as the modalities differ significantly.
4:33:26 PM
MR. REBITZER explained that the true cost of telehealth is not
only the setup, training, and maintenance of systems but also
the opportunity cost of what providers are not doing while
delivering telehealth. He stated that if compensation for
telehealth falls too far below that of other services, providers
may stop investing attention and resources, leading to
infrastructure decline. He warned that this free-riding problem
could reduce telehealth capacity in Alaska. He emphasized that,
given Alaska's large distances and the high value of telehealth,
reducing capacity would be a serious mistake.
4:35:15 PM
SAMMY MACK, Co-owner, Alaska Telepsychology, Anchorage, Alaska,
testified by invitation on SB 83. She said she is a clinical
psychologist and supports SB 83:
[Original punctuation provided.]
In 2018, our company became the first private Alaskan
mental health practice to offer mental health services
through HIPAA encrypted videoconferencing. Over the
past 7 years we have provided psychotherapy,
psychological testing, and psychiatric care via
Telehealth and also maintain an in-person office space
for patients if they come to town. Our practice
includes clinical psychologists, social workers,
professional counselors, marriage and family
therapists, and a psychiatric nurse practitioner.
We are in-network with most major insurance providers,
and nearly all of our providers have a waitlist-- the
demand for our services is great. For many,
Teletherapy is their only option for accessing timely,
high-quality mental health care. For most, paying out-
of-pocket is a financial impossibility, and therefore
insurance billing is a must.
Unfortunately, many Alaskan mental health providers
are requiring payment in full at the time of service
because negotiated insurance reimbursement rates have
failed to keep up with the rising cost of living and
inflation.
A further complication is a lack of parity between
Telepsychology and in-person services. Providers are
disinclined to provide Telehealth services when these
are reimbursed at lower rates than in-person care.
Inadequate Telehealth coverage drives patients toward
large, nationwide online therapy platforms, where they
experience inconsistent care and a revolving door of
therapists unfamiliar with the unique challenges of
life in Alaska.
4:37:22 PM
MS. MACK added that this relates to what Senator Hughes'
mentioned regarding seeing more patients on telehealth. Many
national platforms crank out many sessions in a day and provide
inadequate care because they are overburdened.
4:37:44 PM
MS. MACK continued reading her testimony:
[Original punctuation provided.]
Pay parity will allow providers to offer high-quality,
accessible mental health services without financial
disincentives. Without pay parity, we risk losing
providers to cash-pay models or losing them altogether
- a particularly acute problem in rural Alaska where
rates of suicide and abuse are among the highest in
the nation. As a lifelong Alaskan, I am proud to own
Alaska Telepsychology and to provide services to
Alaskans across our state. Please support pay parity
so that Alaskans from Savoonga to Dillingham to Sitka,
Alaskans regardless of location, can access high-
quality mental health care moving forward. Thank you
for your time and consideration. Please let me know if
you have any questions.
4:38:45 PM
CHRISTINE SAGAN, Nurse Practitioner, Vitae Integrative Medical
Center, Anchorage, Alaska, testified by invitation on SB 83. She
said she is in strong support of the bill and commented that her
experience as a nurse practitioner since 2007 and in private
practice since 2015 showed the importance of telemedicine,
especially during COVID-19. She explained that reimbursement
parity matters because, while care quality and effort remain the
same, insurers such as Blue Cross paid 40 percent less for
telemedicine visits, which forced her clinic to bring patients
back in person despite ongoing pandemic concerns. She noted that
telemedicine improved compliance, reduced no-shows, increased
access, and lowered indirect costs for patients by saving travel
time and expenses. She emphasized that clinics still carry
overhead costs such as staff, electronic medical records,
billing, and facilities, and argued that paying 40 percent less
for telemedicine undermines continuity of care in Alaska, where
distance makes access difficult.
4:44:48 PM
CHAIR DUNBAR thanked the testifiers, acknowledging the time and
cost burdens for medical providers. He noted that he had
answered his own earlier question regarding other states'
practices. He stated that a document provided in the bill packet
showed 21 other states required payment parity for telehealth
services on a permanent basis, according to the American Medical
Association. He clarified that this information was from 2023
and may have changed. He invited Ms. Wing-Heier to come forward
to answer questions.
4:45:24 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community, and Economic Development, Juneau, Alaska,
answered questions on SB 83. She put herself on the record.
CHAIR DUNBAR stated that he did not see any statements from the
division, aside from a possible zero fiscal note. He asked what
the anticipated impact on rates would be from a bill like SB 83.
4:45:53 PM
MS. WING-HEIER stated that conversations with insurers revealed
a disconnect between providers and payers. She explained that
the insurers the division spoke to believe they are paying at
parity for telehealth and in-office visits, with only minor
exceptions. She acknowledged that Senator Claman had received
constituent concerns about a lack of parity but said she had not
been able to find exactly where it is. She added that both
commercial insurers affirmed parity and neither submitted a
letter of opposition to the bill.
CHAIR DUNBAR observed that if the bill had a significant
financial impact, insurers would likely have submitted comments,
but they had not. He noted this could also suggest the bill
simply codifies existing practice. He then asked whether there
could be any unintended consequences from passing the bill.
4:47:06 PM
MS. WING-HEIER stated she could not predict future actions by
insurers but emphasized the state's ongoing effort to reduce
health care costs. She noted that parity is not currently in
statute and acknowledged uncertainty about the source of the
reported disconnect. She referenced a testifier's claim of a 40
percent difference in payment and expressed interest in
reviewing the billing code used to investigate the discrepancy
further. She reiterated the difficulty in forecasting how
insurers might respond when negotiating future rates with
providers.
4:47:46 PM
CHAIR DUNBAR noted that at least 21 states had adopted payment
parity legislation as of 2023. He asked if there were any known
trends or impacts on rates in those states following the
adoption of similar legislation.
4:48:00 PM
MS. WING-HEIER stated that parity for telehealth and behavioral
health is an ongoing issue in many states. She confirmed
awareness that several states have adopted similar legislation.
She added that there have been no reports of negative impacts
from states that have already passed such laws.
4:48:16 PM
CHAIR DUNBAR asked whether the concern mentioned referred to a
lack of payment parity or to the payment parity laws themselves.
4:48:22 PM
MS. WING-HEIER clarified that the concern is about a lack of
payment parity, which is being addressed in various states.
4:48:35 PM
SENATOR TOBIN stated that her main question was what problem SB
83 aims to fix, a question more appropriate for the bill sponsor
than the division. She noted that both the Division of Insurance
and the Department of Retirement and Benefits submitted zero
fiscal notes. She sought clarification that the SB 83 would have
no impact on AlaskaCare and no fiscal impact to the state unless
renegotiation occurs.
4:49:06 PM
MS. WING-HEIER stated she could not speak officially for the
Department of Retirement and Benefits but, based on her
conversations with them, they indicated they are currently
paying at parity. She acknowledged the possibility of some
losses within the plan but said the Department believes it is
meeting the intent of the statute.
4:49:37 PM
SENATOR HUGHES asked whether there was a rough estimate of the
percentage of appointments conducted via telehealth versus in
person. She suggested that if telehealth visits were reimbursed
even 10 percent less than in-person visits, AlaskaCare could
potentially reduce health care costs. She noted this could lead
to savings for both consumers and the State of Alaska. She asked
if such a percentage is known and whether it is reasonable to
assume that lower telehealth reimbursement could help reduce
overall costs.
4:50:44 PM
MS. WING-HEIER responded that she did not currently have data on
the percentage of telehealth visits compared to in-person visits
but would work to gather that information. She emphasized that
the division is actively seeking ways to reduce health care
costs without harming the overall system. She stated that any
opportunity to save money is being considered for inclusion not
only in plans regulated under Title 21 and the Division of
Insurance but also in AlaskaCare and other plans across the
state. She acknowledged that Alaska's health care costs are high
and that employers are struggling to manage them.
4:51:31 PM
SENATOR HUGHES posed a hypothetical policy scenario in which
telehealth visits are reimbursed at 90 percent of in-person
visit rates. She asked whether, if private insurers and
AlaskaCare adopted this approach, it would result in reduced
health care costs for Alaskans.
4:51:58 PM
MS. WING-HEIER stated her belief that such a policy would have
to result in reduced health care costs.
4:52:15 PM
CHAIR DUNBAR concluded invited testimony on SB 83.
4:52:37 PM
SENATOR CLAMAN responded to questions raised by Senator Hughes
and offered a perspective that differed from Ms. Wing-Heier's.
He stated that while paying telehealth at 90 percent of in-
person rates might appear to save money if focusing solely on
per-visit costs, this view overlooks the broader economic
impact. He referenced testimony from Alaska providers who
emphasized that telehealth improves access and consistency of
care, which can reduce costly emergency and complex care. He
argued that paying parity enables preventive care that lowers
total health care spending, and that analyzing costs per visit
without considering overall patient outcomes and system-wide
expenses presents a flawed understanding.
4:54:31 PM
CHAIR DUNBAR stated that affordability is a key priority for
both the committee and the administration regarding health care
costs, but noted that quality, effectiveness, and availability
are equally important. He emphasized that the testimony from the
second provider highlighted availability as a critical benefit
of telehealth. He shared that delays in accessing care can
negatively affect both physical and psychological health.
4:55:16 PM
SENATOR HUGHES emphasized the value of preventive care, noting
that early intervention reduces long-term health care costs. She
acknowledged that parity in telehealth increases patient
compliance, particularly in remote areas, but pointed out that
this also increases provider income, as more visits are
completed and reimbursed at full rate. She expressed concern
that this dynamic may unintentionally increase overall health
care spending in Alaska. She underscored the financial burden on
businesses, school districts, and families, and urged the
committee to prioritize consumer affordability. She advocated
for a compromisesuch as reimbursing telehealth at 90 or 95
percentto maintain access while achieving some cost savings.
4:58:27 PM
CHAIR DUNBAR held SB 83 in committee.