Legislature(2023 - 2024)BUTROVICH 205
04/16/2024 03:30 PM Senate HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| HB17 | |
| SB219 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 17 | TELECONFERENCED | |
| + | SB 219 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 219-PRIOR AUTH EXEMPT FOR HEALTH PROVIDERS
3:54:11 PM
CHAIR WILSON reconvened the meeting and announced the
consideration of SENATE BILL NO. 219 "An Act relating to
utilization review entities; exempting certain health care
providers from making preauthorization requests for certain
services; and providing for an effective date."
3:54:48 PM
JULIA FONOV, Staff, Senator David Wilson, Alaska State
Legislature, Juneau, Alaska, provided the sponsor statement for
SB 219 on behalf of the sponsor:
[Original punctuation provided.]
Sponsor Statement
Senate Bill 219
"An Act relating to utilization review entities;
exempting certain health care providers from making
preauthorization requests for certain services; and
providing for an effective date."
SB 219 aims to reduce the wait time for certain
health care services by exempting qualified health
care providers from making preauthorization requests
for said services. Currently, Alaskans who need
certain health care services must wait days or weeks
to get preauthorized to receive health care services
because of the processing time between the health care
provider and insurance companies. This bill would help
Alaskans receive health care services immediately,
especially health care services that could save their
lives.
Health care providers shall qualify for a prior
authorization exemption if at least 80 percent of
prior authorization requests submitted in the past 12-
month period were approved for that health care
service. Utilization review entities will provide
exempted health care providers with a list of health
care services for which the exemption applies and the
duration of the exemption. This helps eliminate
unnecessary delays in care by granting providers
exemptions who have demonstrated consistent adherence
to approval guidelines from prior authorization
requirements.
Other states with prior authorization exemptions
have seen increased frequency of patients who receive
the health care services they need and help eliminate
unnecessary delays in care. This bill will help
Alaskans receive fast, efficient, and quality
healthcare when they need it without waiting for a
preauthorization process that could cause their health
to decline even more.
3:56:14 PM
MS. FONOV provided the sectional analysis for SB 219:
[Original punctuation provided.]
Sectional Analysis
Senate Bill 219 v. A
"An Act relating to utilization review entities;
exempting certain health care providers from making
preauthorization requests for certain services; and
providing for an effective date."
Section 1: Amends AS 21 (Insurance) .07 (Patient
Protections Under Health Care Insurance Policies) .005
(Regulations relating to health care insurance
policies).
Page 1, line 5, through line 14: Adds processes for
the Director of Insurance to adopt regulations for
utilization review entities, who are individuals that
perform prior authorization, as established under
section 2 of this bill.
Section 2: Adds a new section .100 (Utilization review
entities) to AS 21 (Insurance) .07
(Patient Protections Under Health Care Insurance
Policies) Page 2, line 1 through line 7: Adds section
(a) which explains a healthcare provider is not
required to complete prior authorization for a covered
person if at least 80 percent of prior authorization
requests submitted by the provider for that health
care service have been approved in the past 12 months.
Page 2, line 8 through line 12: Adds section (b) which
explains a health care provider may be evaluated if
they continue to qualify for an exemption not more
than once every 12 months, and an existing exemption
is not required to be evaluated and a longer exemption
period may be established.
Page 2, line 13 through 14: Adds section (c) which
explains health care providers do not have to request
an exemption to qualify for an exemption.
3:57:41 PM
MS. FONOV continued the sectional analysis of SB 219, version A:
[Original punctuation provided.]
Page 2, line 15 through 20: Adds section (d) which
explains if a health care provider is denied an
exemption, they may request evidence once every 12
months on why they were denied an exemption and an
explanation of how to appeal the denial, and the
health care provider may appeal the denial.
Page 2, line 21 through line 30: Adds section (e)
which explains utilization review entities may revoke
an exemption after 12 months if: (1) they determine
the health care provider does not meet the 80 percent
approval criteria based on a review of the claims for
the health care service for which the exemption
applies, (2) they provide the health care provider
with the information used to determine revoking the
exemption, (3) they explain to the health care
provider how to appeal the determination.
Page 2, line 31 through page 3, line 3: Adds section
(f) which explains the exemption remains in effect
until 30 days after the health care provider is
notified of the decision to revoke the exemption or,
if the health care provider appeals the determination,
five days after the revocation is kept after appeal.
Page 3, line 4 through line 8: Adds section (g) which
specifies a decision to revoke or deny an exemption by
a utilization review entity must be made by a health
care provider licensed in Alaska with the same or
similar specialty as the health care provider being
considered and must have experience providing the
health care service for which the requested exemption
applies.
Page 3, line 9 through 13: Adds section (h) which
specifies a utilization review entity must provide a
health care provider who receives an exemption of this
section with a notice that includes: (1) a statement
that the health care provider qualifies for an
exemption from a prior authorization requirement and
the duration of the exemption, (2) a list of health
care services for which the exemption applies.
3:59:34 PM
MS. FONOV continued the sectional analysis of SB 219, version A:
[Original punctuation provided.]
Page 3, line 14 through line 23: Adds section (i)
which specifies utilization review entities may not
deny or reduce payment for a health care service
exempted from prior authorization, including a health
care service ordered by an exempted health care
provider that is performed or supervised by another
health care provider, unless the health care provider
providing the health care service: (1) knowingly
misrepresented the health care service in a request
for payment with the specific intent to deceive and
obtain an unlawful payment from a utilization review
entity or, (2) failed to substantially perform the
health care service.
Page 3, line 24 through page 4, line 19: Adds section
(j) which defines in this section:
(1) "health care service" means: (A) the
provision of pharmaceutical products, services, or
durable medical equipment or, (B) a health care
procedure, treatment, or service provided: (i) in a
health care facility licensed in this state or, (ii)
by a doctor of medicine, by a doctor of osteopathy, or
within the scope of practice of a health care
professional who is licensed in this state.
(2) "health maintenance organization" has the
meaning given in AS 21.86.900 (means a person that
undertakes to provide or arrange for basic health care
services to enrollees on a prepaid basis).
(3) "prior authorization" means the process used
by a utilization review entity to determine the
medical necessity or medical appropriateness of a
covered health care service before the health care
service is provided or a requirement that a covered
person or health care provider notify a health care
insurer or utilization review entity before providing
a health care service.
(4) "utilization review entity" means an
individual or entity that performs prior authorization
for: (A) an employer in Alaska with employees covered
under a health benefit plan or health insurance
policy, (B) a health care insurer, (C) a preferred
provider organization, (D) a health maintenance
organization or, (E) an individual or entity that
provides, offers to provide, or administers hospital,
outpatient, medical, prescription drug, or other
health care benefits to a person treated by a health
care provider licensed in Alaska under a health care
policy, plan, or contract.
4:00:09 PM
MS. FONOV continued the sectional analysis of SB 219, version A:
[Original punctuation provided.]
Section 3: Effective date. Provides an immediate
effective date.
4:00:22 PM
SENATOR TOBIN referred to the definition section of SB 219 page
4, line 9 and sought clarification on the term "utilization
review entity." She noted that the term "entity" typically
suggests a group or organization but observed in the definition
that it could refer to an individual or an organization. She
asked for an explanation of the sponsor's intent.
4:01:11 PM
MS. FONOV deferred Chair Wilson.
CHAIR WILSON deferred to Ms. Wing-Heier.
4:01:40 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), Anchorage,
Alaska, explained that utilization review or independent review
organizations are used by the division to resolve disputes over
denied claims or contested treatments. She stated that these
organizations are typically peer groups with specialized
knowledge of procedures and operate under a rotating contract
system, with approximately 10 groups currently used. When a
request is received, it is sent to these organizations for an
independent determination on whether the treatment is justified,
or the insurance company is correct in denying it. She
emphasized that the reviewers are highly qualified, independent
of the insurance companies, and not directly connected to the
patients. She noted that none of the organizations are based in
Alaska but offered to provide a list of the groups used.
4:02:50 PM
SENATOR TOBIN sought clarification of her understanding. She
noted that the peer groups evaluate services within their
expertise but raised a concern about how this aligns with prior
authorization, which she associated with needing a quick
response. She asked how these two processes intersect, as
assembling and deploying a group appears to require time.
4:03:20 PM
MS. WING-HEIER explained that the independent review
organizations are already established and operational, serving
not only Alaska but other states as well. For immediate needs,
the process requires a response within 24 hours, ensuring timely
handling of urgent cases, while non-urgent cases follow
specified time frames, which she offered to provide. She
clarified that these reviews primarily address denied claims or
situations where prior authorization is not granted. She noted
there is no way to bypass prior authorization and emphasized
reliance on these organizations to determine if the patient is
entitled to the treatment under their policy.
4:04:12 PM
CHAIR WILSON announced invited testimony on SB 219.
4:04:33 PM
JEFFERY DAVIS, Senior Vice President, Radiation Business
Solutions, Joelton, Tennessee, said he is a healthcare
consultant with extensive experience in Alaska's healthcare
industry since 1986, including as president of Blue Cross of
Alaska from 1996 to 2013. He said he has worked five years on
the provider side insurance and is testifying as an interested
party. He stated that SB 219 is primarily about protecting
patients rather than focusing on payers or providers. He
emphasized that patients bear the most significant costs of
delays caused by prior authorization, experiencing documented
physical, emotional, and financial harms. While acknowledging
that prior authorization impacts providers, he stressed that the
effects on patients are paramount.
4:05:53 PM
MR. DAVIS stated that prior authorization initially aimed to
reduce unnecessary care and ensure quality, but over 40 years,
it has expanded unchecked and become more problematic than
beneficial. He clarified that SB 219 does not eliminate prior
authorization but seeks to restore balance, which has become
skewed heavily in favor of payers. He explained that provider
contracts universally require adherence to payer utilization
standards, including any changes imposed, leaving providers
little recourse other than contract termination. He noted that
this unchecked authority allows payers to add prior
authorization layers without oversight, increasing burdens on
patients and providers. He stated that studies show providers
spend 10 to 15 percent of their time managing prior
authorizations, leading to significant productivity losses and
fewer opportunities to see patients, even though approval rates
exceed 95 percent.
4:07:57 PM
MR. DAVIS highlighted that while current statutes require a
three-day turnaround for routine prior authorization approvals,
the issue arises with denials, which are not uncommon. He
explained that in some specialties and with certain payers,
routinely recognized treatments are denied entirely, often
because payers prefer less expensive alternatives to what the
provider deems best for the patient. He emphasized that initial
denials could result in weeks or even months of delay before a
final resolution is reached and care is provided, placing the
costs of the delay on the patients.
4:09:10 PM
MR. DAVIS stated that SB 219 seeks to restore balance in the
relationship between payers and providers. He explained that
providers who have a history of approving particular services at
least 80 percent of the time are not the intended targets of
prior authorization, which is aimed at addressing unnecessary
actions, fraud, or abuse. These providers have demonstrated
efficiency and effectiveness and should be exempted from the
burdens of prior authorization.
4:09:52 PM
MR. DAVIS further noted that some payers already implement
similar programs, often referred to as Gold Card programs, which
exempt providers meeting specific standards. He emphasized that
SB 219 formalizes this approach into statute, eliminating the
need for individual providers to pursue exemptions, a process he
described as both costly and time-consuming.
4:10:41 PM
CHAIR WILSON concluded invited testimony and opened public
testimony on SB 219.
4:11:09 PM
BRENDA SNYDER, Director of State Government Affairs, CVS Health,
Tacoma, Washington, Testified in opposition to SB 219. She
stated that Aetna's subject matter expert, Mark Reese, was
unavailable but had previously testified in the House expressing
concerns. She said Aetna supports innovative approaches to
increasing healthcare access but believes SB 219 disregards the
benefits of prior authorization, which ensures care is necessary
based on clinical guidelines. She argued that the SB 219's broad
approach reduces standards without considering patient-specific
needs and noted Aetna approves 85 to 90 percent of prior
authorization claims. She highlighted Aetna's provider
differentiation program, which automates approvals for certain
high-performing providers, and expressed concern that SB 219
lowers the approval threshold without accounting for procedure
volume or expertise. She urged opposition to SB 219, citing its
overly broad scope and the need for better solutions.
4:13:37 PM
PAM VENTGEN, Executive Director, Alaska State Medical
Association, Anchorage, Alaska, testified in support of SB 219.
shared testimony that Dr. John Kelly, an Alaska neurologist
treating patients with multiple sclerosis shared on the House
floor. She said his patient was a young, active veterinarian
woman who was denied prior authorization for the recommended
treatment and forced into step therapy with a less effective
medication, risking permanent damage and severe consequences.
She stated that prior authorization delays have caused
significant patient harm, including vision loss, and noted
physicians' frustration with educating reviewers on standard
care during appeals. She argued that while prior authorization
once served a purpose, it has become harmful and no longer cost-
effective.
4:16:51 PM
GARY STRANNIGAN, Vice President, Congressional and Legislative
Affairs, Premera Blue Cross and Blue Shield of Alaska, Everett,
Washington, testified in opposition to SB 219. He explained that
Premera uses prior authorization to combat waste, fraud, and
abuse, which the American Medical Association estimates account
for 25 percent of U.S. medical spending. He expressed concern
that SB 219 would reduce the effectiveness of prior
authorization, potentially increasing costs by 2 percent in
affected markets, which include the individual, small group, and
large group fully insured markets, covering approximately 11
percent of Alaskans. He noted that state employee health plans
and Employee Retirement Income Security Act (ERISA) plans would
not be impacted.
4:18:34 PM
MR. STRANNIGAN highlighted that complying with SB 219 would
require significant IT investments, which would be challenging
to justify in Alaska's small market. He warned that Premera
might discontinue prior authorization entirely, replacing it
with retrospective review, where unnecessary services would not
be paid for, creating uncertainty for providers. He recommended
following Washington State's approach by improving system
efficiencies, such as reducing turnaround times and promoting
electronic submissions to replace outdated fax methods. He noted
that Premera has a gold carding program in Alaska, exempting
high-performing providers from prior authorization, although
some still submit unnecessarily. He shared that only 2.4 percent
of claims involve prior authorization, with a 16.3 percent
denial rate after appeals, underscoring its limited but
impactful use. He emphasized the patient safety and cost
benefits of prior authorization and expressed willingness to
collaborate with the committee to improve the system.
4:23:55 PM
SENATOR DUNBAR asked for an explanation of the enforcement
mechanism used in the Washington state model at both the front
end of responding within the agreed upon timeframe to
preauthorization requests and on the back for wrongful denials.
He questioned if the Washington state model would address
reversal of wrongful denials.
MR. STRANNIGAN replied that the enforcement mechanism in
Washington is the Office of the Insurance Commissioner. He
opined that Alaska's director of insurance could attest that
these offices are very active in protecting consumers, which is
how Premera is held accountable.
4:26:08 PM
CHAIR WILSON closed public testimony on SB 219.
4:26:11 PM
CHAIR WILSON stated that efforts are ongoing to collaborate with
insurers on compromises for the legislation. He indicated a
forthcoming committee substitute (CS) that may adjust the 80
percent threshold, raising it to 90 or 95 percent to ensure
Alaska does not set the lowest standard nationally. He noted
discussions about listing entities instead of individual
providers. He mentioned incentives for providers to use
electronic submissions while keeping fax submissions optional,
as many providers find faxing simpler and more reliable.
4:28:31 PM
SENATOR TOBIN referenced the fiscal note from the division,
noting that costs are expected to be absorbed. She asked for
clarification on the anticipated workload to ensure it is
adequately accounted for.
4:29:07 PM
MS. WING-HEIER explained that insurers currently cover the costs
of independent reviews, a practice expected to continue for
independent review organizations. She noted that a zero fiscal
note was submitted because tasks like drafting regulations or
program monitoring can be managed by existing staff.
CHAIR WILSON stated that discussions are underway with the
Department of Administration to determine what is required to
implement SB 219 for AlaskaCare. He deferred to Director Wing-
Heier to explain why the Division of Insurance does not oversee
AlaskaCare.
4:29:50 PM
MS. WING-HEIER explained that AlaskaCare operates under separate
statutes, as does Medicaid, while Title 21 governs insured
products. She noted that combining these areas into one bill
often becomes cumbersome. The Department of Administration
manages AlaskaCare for retirees, Public Employees' Retirement
System (PERS), and Teachers' Retirement System (TERS). Applying
Title 21 provisions to AlaskaCare could lead to costly
litigation, as the retiree program is constitutionally defined.
She stated that while she is not saying it cannot be done, SB
219 does not currently extend to AlaskaCare, focusing instead on
the 15 percent of Alaskans covered under Title 21 programs.
4:31:03 PM
CHAIR WILSON held SB 219 in committee.