Legislature(2017 - 2018)BELTZ 105 (TSBldg)
03/19/2018 06:00 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB119 | |
| HB170 | |
| SB38 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 119 | TELECONFERENCED | |
| + | HB 170 | TELECONFERENCED | |
| += | SB 38 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 119-HEALTH CARE COSTS: DISCLOSURE;INSURERS;
6:01:34 PM
CHAIR COSTELLO announced the consideration of SB 119. She noted
it is a transparency bill related to health care costs.
6:02:20 PM
BUDDY WHITT, Staff, Senator Shelley Hughes, Alaska State
Legislature, Juneau, Alaska, delivered the following sectional
analysis for SB 119:
Sec. 1, Page 1, Lines 7-10 Adds the Alaska Health Care
Consumer's Right to Shop Act to the uncodified law of
the State of Alaska.
Sec. 2, Page 1, Line 11 Page 2, Line 11 Authorized
the Department of Health and Social Services to
collect and analyze data relating to health care
services and price information.
Sec. 3, Page 2, Line 12 Page 3, Line 20 Adds a new
section to Title 18 for health care services and price
information.
a. Health care provider shall compile a list
annually by procedure code of the top 25 health
care services from each of the six category I CPT
code sections.
CHAIR COSTELLO noted that there was some confusion between SB
119 and the transparency bill in the House that Representative
Spohnholz introduced. She asked him to clarify that SB 119
addresses the top 150 codes, not the top 50 codes.
MR. WITT confirmed that SB 119 addresses the top 150 codes. He
explained that there are six categories of CPT or Current
Procedural Terminology codes. The first is for evaluation and
management. The second category covers anesthesia. The third
category covers surgery. The fourth category covers radiology.
The fifth category covers pathology and laboratory services. The
sixth category is classified as general medicine. The top 25
from each of those six categories gives a total of 150 codes
that are requested in the bill.
CHAIR COSTELLO said she would follow up and ask Ms. Wing-Heier
the rationale for picking the top 25 codes in each of those
categories. She asked him to talk briefly about the number of
codes in each of the categories.
MR. WITT said there are 300 codes within just category one,
evaluation and management. That is the lowest of the six.
Anesthesiology has 1,949 codes. Surgery has about 60,00 codes.
Radiology has over 9,000. Pathology and laboratory has about
9,000, and general medicine is around 8,500. That's about 90,000
codes.
6:06:14 PM
SENATOR STEVENS asked how many facilities are in Alaska.
MR. WITT said he didn't know, but the bill would apply to all of
them.
SENATOR STEVENS asked if this includes hospitals, clinics, and
doctors' offices.
MR. WITT said any facility that is registered to provide health
care services in the state would fall under the parameters of SB
119.
6:06:48 PM
SENATOR SHELLEY HUGHES, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 119, advised that it's important to
understand that the top 25 codes does not mean the most common.
It means the codes that a prudent person would consider of value
in the management of their own health care affairs, what is most
helpful and relevant to the consumer. The price for each service
includes any discounts that may be applied. The recommendations
for the top 25 codes came from the director of the Division of
Insurance.
SENATOR GARDNER said she would assume that most providers
routinely do certain basic things, although there may also be
some more exotic procedures. She asked if that was accurate.
MR. WITT replied that is his understanding. Some provisions of
SB 119 do address how patients would find the cost for specialty
procedures. The idea of the 150 codes is that anyone could go to
the state website and see the cost differences between
providers.
SENATOR HUGHES added that a consumer could get a good faith
estimate of what their condition would require. The value of
this is a general comparison of costs. The other pieces will
help the consumer drill down to know exactly what to expect for
costs.
MR. WITT continued the sectional for SB 119.
b. The provider or facility will publish the
lists above, by providing it to the department
for publishing it on their website, by posting it
for public review in the facility or office where
the service(s) are performed and by posting it on
their website.
c. The health care provider or facility may
include a disclaimer noting the price paid may be
higher or lower than listing of services due to
unforeseen needs or complications.
d. The department shall compile the information
provided by the provider or facility and post it
on the department's website for public view.
e. If the provider performs less than 25 of the
services from each CPT code category, then they
will compile a list based upon the total number
of services that they provide.
f. Failing to comply with this section will result in
a civil penalty of $50 per day for each day after
March 31st that the facility or provider has failed to
provide the information. This civil penalty will not
exceed $2,500 annually. An appeal process is allowed
under this section.
6:11:30 PM
CHAIR COSTELLO asked if some may decide to pay the fine rather
than comply.
MR. WITT said that could happen.
6:12:36 PM
Sec. 18.23.405 Page 3, Line 21 Page 4, Line 28 This
section is added to specify the provider and/or facilities
responsibility to provide cost information to patients or
potential patients who have health insurance coverage.
a. Within five business days of request, a provider
must give a good faith estimate of the total charges
of the healthcare service requested if the total of
the charges exceeds $250.
b. The estimate of charges must include the network
status of the provider under the patient's plan,
whether the services of another provider are necessary
and if they are, a separate request to that additional
provider must be made.
c. If the patient is uninsured, the health care
provider must include information about financial
assistance that may be available, as well as the
internet website that provides information about
standard charges for the type of care the patient is
seeking.
d. The patient may request the information in writing
or electronically.
e. Estimate of charges must represent a good faith
effort to provide accurate information, is not legally
binding and is not guaranteed due to unforeseen
conditions.
f. This section does not apply to emergency medical
conditions.
Sec. 18.23.420 Page 4, Line 29 Page 5 This section gives
definitions of terms.
Sec. 4, Page 6 Page 7, Line 4 Adds healthcare insurance
incentive program to the list of items to be included in
the director's annual report.
Sec. 5, Page 7, Line 5 Page 10, Line 19 Adds a new
section to AS 21.96. This section establishes news
provisions for health care insurance companies to operate
in the state of Alaska. This section deals with private
health insurance policies not pre-empted by ERISA or any
other federal laws.
Sec. 21.96.200 Page 7, Lines 6 14 A health care insurer
shall establish an interactive online tool so that the
covered person may request and obtain information about the
amount paid to in-network providers by the insurance
company for specific health care services and be able to
compare prices among network healthcare providers.
MR. WITT pointed out that the bill has covered two entities--the
insurance model for in-network providers and the providers
themselves--that can provide all the costs associated with a
knee replacement or colonoscopy, for example.
Sec. 21.96.205 Page 7, Line 15 31
a. Upon request of a covered person, a health care
insurer shall provide within five days a good faith
estimate of out of pocket expenses that a covered
person will have to pay for a specific covered
medically necessary benefit.
b. This section does not prohibit the health insurance
provider from imposing fees for unforeseen services or
additional costs that come up but were not covered in
the estimate provided in Section (a).
c. The health care insurer shall disclose that this is
an estimate and the actual cost may be different if
unforeseen services or costs arise.
Sec. 21.96.210 Page 8 Page 9, Line 3
a. The health care insurance company shall set up an
incentive plan for a covered person who elect to
receive a health care service from a health care
provider that charges less than the average in-network
price paid by the insurer for that service. At a
minimum the health care services that apply to this
section shall include:
1. Physical and Occupational Therapy Services
2. OBGYN Services
3. Radiology and Medical Imaging Services
4. Laboratory Services
5. Infusion Therapy Services
6. Dental Services
7. Vision Services
8. Behavioral Health Services
9. Inpatient and Outpatient Surgical Procedures: and
10. Outpatient non-surgical diagnostic tests and
procedures
b. The insurer shall provide to the covered person a
cash payment based upon the shared savings that result
from the covered person choosing the provider whose
price falls below the average cost to the insurance
company for that service. For those whose insurance is
provided as part of a group plan offered by their
employer, the shared savings will be split at least
equally between the patient, the employer and the
insurance company. For those who secured health care
insurance on their own without an employer or some
other third party, the cash payment will be calculated
with at least 50% of the shared savings going to the
policy holder.
6:17:11 PM
SENATOR COSTELLO asked if he has information about the result
this has had in other states. She asked if they are talking
about a significant amount of money being paid back.
MR. WITT said similar legislation just passed in Maine with an
effective date of January 1, 2019, but major health care
insurers rolled out a plan this year for incentive programs. It
is too early to tell what the results will be. In New Hampshire
this was implemented for state employees in 2014. Within the
first two years there was $12 million in disbursement savings to
policy holders, but he was waiting to hear from New Hampshire on
what the total savings were for the state.
SENATOR HUGHES said New Hampshire has less than half the state
employees that Alaska has, and their overall costs are not as
high. She estimated the possible disbursement savings as higher
in Alaska.
6:19:01 PM
SENATOR MICCICHE asked how consumers can figure out when there
are negotiated rates.
MR. WITT said the requirement is not for the facility to post
the negotiated rate. If the provider is in network that
information will be provided to the patient. That isn't public.
The information posted publicly is the rack rate, the basic, no-
discount rate a provider is offering to a patient. The bill
dictates that insurance companies must provide a web tool so
that a policy holder can see the prices for an in-network
provider.
MR. WITT said the consumer has three ways to gain information.
1. Rack rate.
2. The provider has five days to provide cost information
based on in-network status.
3. The insurance company must provide information for the
cost of the procedure amongst all in-network providers who
perform that procedure.
SENATOR MICCICHE asked what happens if the insured locates an
out-of-state clinic that is cheaper.
MR. WITT said a provision in the bill covers that if they are
out of network. In-network providers that are out of state are
still subject to the provisions in the bill.
SENATOR STEVENS asked the definition of rack rate.
MR. WITT deferred the question to Ms. Wing-Heier.
6:23:36 PM
MR. WITT continued the sectional for SB 119.
c. The health care insurer will base average price
paid to in-network providers within a reasonable
period of time, but not to exceed one calendar year.
Sec. 21.96.215, Page 9, Lines 4 8 The incentive program
will be made available as a part of all qualified plans in
the state and will notice it at time of initial enrollment
or annual renewal
Sec. 21.96.220, Page 9, Lines 9 13 Before offering an
incentive program, the health insurance company shall file
a description of the program with the Director for
approval.
Sec. 21.96.225, Page 9, Lines 14 20 If a covered person
participates in an incentive program and chooses an out-of-
network provider that results in a savings to the health
care insurer, the health care insurer will treat the amount
paid for the health care service as though it was provided
by an in-network provider or facility.
MR. WITT said this addresses Senator Micciche question
regarding an out-of-state provider who is out of network. If a
patient goes to a provider out of network and that saves out-of-
pocket money for the consumer and saves the insurer money, even
if the percentages paid out of network are different, the
insurance company must treat that as though it happened in
network for the sake of maximum out of pocket. It will not be
part of the incentive program.
CHAIR COSTELLO said people go to in-network providers thinking
there will be a savings. She asked how this happens.
MR. WITT said the assumption is the in-network providers will
provide the best bang for the buck. But without transparency it
is difficult to find those prices in network and out of network.
The FGA [Foundation for Government Accountability] developed
this piece when they saw small-scale providers not included in
networks and their prices could be good for patients. New
Hampshire, Maine, and Massachusetts have seen this be of value
to patients who were trying to save money.
6:27:02 PM
MR. WITT continued the sectional for SB 119.
Sec. 21.96.230, Page 9, Lines 21 23 The incentive program
will not be treated as an administrative expense by the
insurer for rate development or rate filing purposes.
MR. WITT explained that if there is a shared savings, the only
time the incentive occurs is when the insurance company saves
money. They put this provision in, so the insurance company is
not using this incentive. That saves the insurance company money
as an administrative expense. If there is an overall savings, he
said, why put it toward future rate hikes that would happen if
they counted this as an administrative expense for rate
development purposes.
Sec. 21.96.235, Page 9, Line 24 Page 10, Line 9
a. Provides instruction for the health care insurance
company to provide an annual report concerning the
incentive program.
b. Provides instruction for the division of insurance to
provide an aggregate report annually to the legislature on
health care insurance incentive programs in the state.
Sec. 21.96.300, Page 10, Lines 10 19 Establishes
definitions for terms in this section.
Sec. 6, Page 10, Lines 20 22 Adds Sec. 29.35.142 to the
list of home rule powers under AS 29.10.200
Sec. 7, Page 10, Line 23 Page 11, Line 5 The authority to
regulate the disclosure or reporting of price information
for health care services is reserved to the state of
Alaska.
CHAIR COSTELLO asked what Section 6 means.
SENATOR HUGHES said the state would have preemption, so there
would not be a hodgepodge of laws along these lines in various
municipalities throughout the state. There is one set statewide.
MR. WITT continued with the sectional for SB 119.
Sec. 8, Page 11, Line 6 Page 13, Line 22 Health Care
Insurance policies obtained by the Department of
Administration under AS 39.30.090 must be in compliance
with requirements under AS 18.23.400, AS 18.23.405 and AS
21.96.200 AS 21.96.300.
Sec. 9, Page 13, Line 23 Page 14, Line 2 Language added
to AS 39.30.91 providing additional guidance for the
Department of Administration for compliance with
requirements under AS 18.23.400, AS 18.23.405 and AS
21.96.200 AS 21.96.300.
MR. WITT said sections eight and nine are an attempt to make the
provisions of this bill compatible with health insurance
policies attained by the Department of Administration (DOA). In
order for the DOA to be compliant with this bill, they need to
make additional changes. They are having ongoing conversations
with DOA about this. If state employees and the state can see
benefits from this bill, they want to do that.
CHAIR COSTELLO said she understands that the plans offered by
the state do not meet the definition of health insurer or health
care insurance plan. That seems odd to her, but Mr. Witt said
they are addressing that.
MR. WITT said conversations are ongoing with DOA about that.
6:31:04 PM
MR. WITT continued the sectional for SB 119.
Sec. 10, Page 14, Lines 3 8 Amended language to the
uncodified law of the State of Alaska allowing for the
Department of Commerce, Community, and Economic Development
to adopt regulations necessary to implement this act
Sec. 11, Page 14, Line 9 Section 10 of this Act takes
effect immediately.
Sec. 12, Page 14, Line 10 Except for the provision above,
the act has an effective date of January 1, 2018.
CHAIR COSTELLO asked why the Department of Commerce, Community
and Economic Development would write the regulations and not the
Department of Administration.
MR. WITT said the Division of Insurance falls under commerce.
6:32:13 PM
SENATOR MEYER noted the Section 3 civil penalty of $50 per day
and not more than $2,500. He asked who would enforce the
penalties.
MR. WITT said this section would fall under the Department of
Health and Social Services (DHSS) to implement. Most provisions
fall to the Division of Insurance but keeping the list and
following through with repercussions falls under DHSS.
CHAIR COSTELLO asked what happens if the department doesn't
carry through on its role.
MR. WITT said he didn't know.
CHAIR COSTELLO asked Ms. Wing-Heier to define rack rate and to
provide comments on SB 119.
6:34:00 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), Anchorage,
Alaska, explained that the division interprets rack rate in the
context of the bill to mean the undiscounted rate that a
physician would charge a consumer who is not on any insurance
plan. The bill uses that undiscounted rate.
CHAIR COSTELLO said negotiated rates are much different from
rack rates. She asked what value there is in knowing the rack
rate given that the bill offers the consumer three different
routes to gain information about the rates.
MS. WING-HEIER said the division's perspective is that the rack
rate will show the consumer what the charges are between the
providers. To know what someone will pay as a consumer would
require going to the insurer to see what the plan provides. An
uninsured person would pay the undiscounted rack rate. Each plan
from each insurer has a different network provider and those
agreements all have different rates. A consumer will have to go
to their insurance company and look at their version of the bill
to see how their plan will respond.
CHAIR COSTELLO said it seems that the public information about
what the rack rate means will be important because she can
imagine a provider who has to post the rack rate knows that the
negotiated rate might be something quite different. She asked
how to address the fact that the bill might drive consumers away
from something that might be financially beneficial because they
got turned away because of the rack rate and went to another
provider, not realizing that if someone is covered they have to
go to the insurance company.
MS. WING-HEIER said that as they have looked at transparency and
health care in general, it is empowering patients to understand
what they have available to them and decisions they have to
make. If they go to their plan and look at the DHSS website, it
will show five providers and five different rates. Somehow this
information needs to get to the consumers, with or without this
bill, that there is merit in checking what their plan provides,
so they do not end up with a huge bill. The only way they will
know is to find out how their plan responds.
CHAIR COSTELLO asked if some kind of statement for insured
people could be on the state website.
MS. WING-HEIER said a disclaimer could state that "you must or
you should look at your individual plan regardless of who your
employer is or the individual market to see what is going to be
paid in your particular case."
6:38:28 PM
SENATOR STEVENS asked what will be required of the director that
she's not doing now.
MS. WING-HEIER replied gather information for the report and
create regulation for guidance to ensure the insurers are
complying. The bill will require some procedures to make it
work, regulations about how it is implemented, who it applies
to, and making sure providers and insurers are complying.
CHAIR COSTELLO asked if she had spoken to anyone in Maine or New
Hampshire.
MS. WING-HEIER said no. She was planning to talk to the two
commissioners at the next NAIC [National Association of
Insurance Commissioners] meeting.
6:40:48 PM
EMILY RICCI, Chief Health Policy Official, Division of
Retirement and Benefits, Department of Administration (DOA),
Juneau, Alaska, and Michele Michaud, Chief Health Official,
Division of Retirement and Benefits, Department of
Administration (DOA), Juneau, Alaska, introduced themselves.
CHAIR COSTELLO asked if the department has a position on the
bill and whether the department is willing to work with the
sponsor to include state employees.
MS. RICCI said the department has no position on the bill. The
Division of Retirement and Benefits manages the state AlaskaCare
Health Plan, which covers retirees from the Public Employees'
Retirement System, the Teachers' Retirement System, and the
Judicial Retirement System. It also manages the plans for under
6,000 state of Alaska employees. The majority of state employees
have coverage through union health trusts, which are ERISA plans
not subject to this bill. They are not opposed to exploring an
incentive program. They can do that without legislation.
Listening to the sponsor's description of how much New Hampshire
saved was incredible.
MS. RICCI noted that the health plans administrator is the
commissioner of DOA. The commissioner has the authority to
determine what is or what is not included in the plan. The
health plan has not been subject to regulation by another
department or another division, such as is being considered
here. The bill has areas that would be difficult to comply to
because it doesn't apply to the division, like a rate setting
process. They do have the ability to implement without
legislation. To be subject to provisions of another division in
another department is a little messy.
CHAIR COSTELLO asked why an incentive program hasn't been
implemented if it can provide significant savings.
MS. RICCI explained the process to determine if it's feasible.
CHAIR COSTELLO asked if the fiscal note from the department is
zero because it does not affect them.
MS. RICCI said it is because the health plans do not meet the
definition of an insurer.
6:45:41 PM
At ease.
6:48:16 PM
CHAIR COSTELLO reconvened the meeting.
SENATOR MEYER noted that Ms. Ricci said the bill would not be
applicable to all state employees because some have different
health care providers. He asked how many providers there are.
6:48:50 PM
MS. MICHAUD answered there are four union health trusts that
represent state employees not covered by the AlaskaCare Health
Plan. They are the Public Safety Employees Union; Master, Mates
and Pilots; Alaska State Employees Association; and Local 71,
Labor, Trades, and Crafts.
SENATOR MEYER asked if NEA [National Education Association] has
its own health trust.
MS. MICHAUD said they might have a health trust.
SENATOR MEYER asked if there would be savings if all
consolidated.
6:49:58 PM
MS. RICCI said the state undertook a feasibility study recently
and it appears there would be some savings. Implementation is a
complex idea that would cost over $3.5 million in annual
expenditures and involve over 200,000 lives. The administration
is evaluating options for what a Health Care Authority would
look like.
SENATOR MEYER referenced a study done by Commissioner Sheldon
Fisher and the potential saving that was over $100 million.
6:51:30 PM
SENATOR GARDNER asked about opening the state plan to Alaskans
who are not state employees.
MS. RICCI said prior studies looked at that including the Health
Care Authority Feasibility Study that DOA did last year. It
looked at ways members of the AlaskaCare Health Plan and others
could participate in a new entity or new pool. Prior to that, a
Hays Group study from four or five years ago looked at opening
the AlaskaCare Health Plan participation to teachers. She didn't
recall the financial outcome of that study. The state plan has
16,000 covered lives, just under 6,000 employees and their
dependents, and that pool isn't large enough to take on
additional health risks without potentially increasing premiums.
As a self-insured plan, the state is an entity that funds those
premiums through employer and employee contributions. Any
additional cost to the plan would be passed to the department.
The idea of the state leveraging its volume to allow other
groups to benefit is part of what the Health Care Authority
Feasibility Study is looking at. The AlaskaCare Health Plan is
probably not large enough to accept more risk by opening up
participation.
6:53:54 PM
CHAIR COSTELLO held SB 119 in committee with public testimony
open.