02/09/2023 03:30 PM Senate HEALTH & SOCIAL SERVICES

          SB 45-DIRECT HEALTH AGREEMENT: NOT INSURANCE                                                                      
                                                                                                                                
3:31:20 PM                                                                                                                    
CHAIR WILSON announced the consideration of SENATE BILL NO. 45                                                                  
"An Act relating to insurance; relating to direct health care                                                                   
agreements; and relating to unfair trade practices."                                                                            
                                                                                                                                
3:31:40 PM                                                                                                                    
EMILY RICCI, Deputy Commissioner, Department of Health, Juneau,                                                                 
Alaska, introduced herself.                                                                                                     
                                                                                                                                
3:32:04 PM                                                                                                                    
CHAIR WILSON asked  why SB 45 did not include  Medicaid. He asked                                                               
the department  to discuss the  differences between  Medicare and                                                               
Medicaid as they relate to SB 45.                                                                                               
                                                                                                                                
3:32:44 PM                                                                                                                    
RENEE  GAYHART, Director,  Health  Care  Services, Department  of                                                               
Health, Juneau,  Alaska, stated that Medicare  is not needs-based                                                               
and is  funded entirely by  the federal government. It  was based                                                               
on  being  65  years  old and  other  conditions.  Recipients  of                                                               
Medicare  pay deductibles,  copays,  and premiums.  On the  other                                                               
hand, Medicaid is fully needs-based.  It is funded jointly by the                                                               
federal and state governments.  Medicaid coordinates benefits, so                                                               
it is the  payer of last resort  in all cases. The  payer of last                                                               
resort  means all  liabilities, such  as workman's  compensation,                                                               
group insurance, and  court orders pay before  Medicaid. The only                                                               
payer  that would  come  after Medicaid  would  be Indian  Health                                                               
Services (HIS). Centers for Medicare  and Medicaid Services (CMS)                                                               
cannot add direct  contracting. CMS did an  innovative project in                                                               
2020  that  allowed  Medicare recipients  to  enter  into  direct                                                               
healthcare agreements. The  project benefited Medicare recipients                                                               
because  they paid  deductibles and  premiums. Since  Medicaid is                                                               
the  payer of  last resort,  that advantage  does not  apply. CMS                                                               
approved Medicaid  on a  limited basis  for managed  care states.                                                               
Alaska  is not  a  managed  care state;  it  is  a full  fee-for-                                                               
service state.                                                                                                                  
                                                                                                                                
3:35:31 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
3:36:47 PM                                                                                                                    
CHAIR WILSON reconvened the meeting.                                                                                            
                                                                                                                                
3:36:53 PM                                                                                                                    
SENATOR DUNBAR  said he spoke  with some primary  care physicians                                                               
who  expressed concern  that the  direct  healthcare model  skims                                                               
wealthy  people  away  from  clinics  that  accept  Medicaid.  In                                                               
effect, it  renders those clinics  unsustainable and  forces them                                                               
to change  their business  model. He asked  if there  is evidence                                                               
that  SB  45 would  lead  to  a  reduction in  offices  accepting                                                               
Medicaid.                                                                                                                       
                                                                                                                                
3:38:21 PM                                                                                                                    
MS.  RICCI   replied  that  it   is  difficult  to   predict  how                                                               
utilization would  shift providers' business practices.  She said                                                               
she  would look  at other  states  and report  to the  committee.                                                               
States that  may have leveraged  direct health care  programs for                                                               
Medicaid  beneficiaries are  states with  managed care,  which is                                                               
different than  what SB 45  contemplates for Alaska. Alaska  is a                                                               
fee-for-service   state  so   it   would   need  a   programmatic                                                               
demonstration project.                                                                                                          
                                                                                                                                
3:40:03 PM                                                                                                                    
SENATOR DUNBAR reiterated that he  would like to know whether the                                                               
number  of doctors  accepting Medicaid  decreases in  states that                                                               
allow direct  health care agreements, especially  those analogous                                                               
to Alaska.                                                                                                                      
                                                                                                                                
3:40:43 PM                                                                                                                    
SENATOR GIESSEL  said the government  cares for seniors  and aids                                                               
children. She  stated her  understanding that  there is  no copay                                                               
mandated  for a  Medicaid  patient who  visits  a doctor  because                                                               
Alaska  is  a  fee-for-service  state.  However,  Medicare  is  a                                                               
program that a  provider opts into. She asked whether  it is true                                                               
that a  provider can opt  out of  Medicare and offer  direct care                                                               
services to senior citizens over age 65.                                                                                        
                                                                                                                                
MS. RICCI said that is true.                                                                                                    
                                                                                                                                
3:41:50 PM                                                                                                                    
SENATOR GIESSEL  opined that the  direct care model would  fill a                                                               
crucial  gap in  Anchorage due  to  the closing  of the  Regional                                                               
Senior   Care  Clinic.   In  Alaska,   Medicaid  pays   a  higher                                                               
reimbursement than Medicare. Providers  avoid senior care because                                                               
it  is  complex, and  the  reimbursement  is extremely  low.  She                                                               
opined there is likely no  risk of Medicaid patients switching to                                                               
a  direct  health care  provider  since  they  pay no  money  for                                                               
service.  The direct  care model  benefits  seniors because  most                                                               
healthcare professionals have opted out of Medicare.                                                                            
                                                                                                                                
3:43:50 PM                                                                                                                    
SENATOR  GIESSEL  asked if  the  committee  could hear  from  Dr.                                                               
Erickson, a direct care services physician.                                                                                     
                                                                                                                                
3:44:17 PM                                                                                                                    
DR.  WADE  ERICKSON,  Direct Care  Services  Physician,  Capstone                                                               
Family Medical, Wasilla, Alaska, introduced himself.                                                                            
                                                                                                                                
3:44:26 PM                                                                                                                    
SENATOR  GIESSEL  asked what  Dr.  Erickson's  rationale was  for                                                               
offering direct health care agreements and the pros and cons.                                                                   
                                                                                                                                
3:44:41 PM                                                                                                                    
MR. ERICKSON said forty-four states  offer the direct health care                                                               
model.  It  has  successfully created  access  for  underinsured,                                                               
small  businesses, and  individuals who  do not  meet the  income                                                               
thresholds for Medicaid  or have enough money to  purchase a plan                                                               
on the  individual market. He  stated that his  attorney informed                                                               
him that the direct health care  model falls under a gray area of                                                               
Title 21. Therefore,  he decided to work on cleaning  up the gray                                                               
area  before starting  a larger  medical practice.  He said  many                                                               
people and businesses have expressed  interest in the direct care                                                               
model, and he  is hopeful it will be another  means for people to                                                               
access affordable care.                                                                                                         
                                                                                                                                
3:47:05 PM                                                                                                                    
SENATOR GIESSEL asked what benefits  the direct health care model                                                               
offers seniors.                                                                                                                 
                                                                                                                                
3:47:16 PM                                                                                                                    
MR. ERICKSON  said there is  a significant need for  primary care                                                               
physicians  for   seniors  in   Anchorage.  Direct   health  care                                                               
agreements are permissible with Medicare  if the physician is not                                                               
a  Medicare-enrolled provider.  He  said other  states are  doing                                                               
Medicare pilot programs.                                                                                                        
                                                                                                                                
3:48:17 PM                                                                                                                    
SENATOR TOBIN  said SB 45  prohibits businesses  from negotiating                                                               
direct healthcare  agreements for  their employees. She  asked if                                                               
employers  would  be  paying  the   periodic  fee  for  differing                                                               
employee   agreements  or   if  there   would  be   a  collective                                                               
negotiation presented to the employer by the employees.                                                                         
                                                                                                                                
3:48:55 PM                                                                                                                    
MR. ERICKSON  replied that, for  practical purposes,  an employer                                                               
generally  approaches  a  clinic  with the  number  of  employees                                                               
needing  a plan.  Usually, the  human resources  department of  a                                                               
small company or the owner presents an offer to the employees.                                                                  
                                                                                                                                
3:49:36 PM                                                                                                                    
CHAIR  WILSON said  he knows  a behavioral  health employer  that                                                               
offers a  cash health care  benefit. Employees can use  the money                                                               
as they  choose, but the intent  is to offset the  cost of health                                                               
care needs.                                                                                                                     
                                                                                                                                
MR. ERICKSON stated he had  offered cash benefits for health care                                                               
to his employees.                                                                                                               
                                                                                                                                
3:50:05 PM                                                                                                                    
SENATOR  TOBIN  asked how  an  employee  would obtain  affordable                                                               
medications, such as birth control or asthma inhalers.                                                                          
                                                                                                                                
3:50:26 PM                                                                                                                    
MR.  ERICKSON replied  that employees  can contract  with various                                                               
health  care providers  under SB  45, such  as behavioral  health                                                               
care providers,  primary care providers,  dentists, optometrists,                                                               
and pharmacists. An  employee could also look for  a primary care                                                               
provider that  offers a generic prescription  drug benefit. There                                                               
are  organizations  in  the  Lower 48  working  to  combine  drug                                                               
benefits with direct primary care  as an add-on service. However,                                                               
most  providers  do  not offer  a  pharmaceutical  benefit;  they                                                               
provide  a  prescription  to  a  pharmacy.  Physicians  typically                                                               
discuss   affordable  and   available  medication   options  with                                                               
patients. Most direct primary care  providers in the Lower 48 can                                                               
provide  patients affordable  access to  the top  100 drugs  they                                                               
prescribe. He opined that there  will always be issues with high-                                                               
end drugs for cancer and  autoimmune diseases. Patients will need                                                               
insurance for these drugs to  be affordable. Luckily, most people                                                               
do not require high-end drugs.                                                                                                  
                                                                                                                                
3:53:39 PM                                                                                                                    
CHAIR  WILSON  set  an  amendment  deadline and  held  SB  45  in                                                               
committee.