Legislature(2017 - 2018)BELTZ 105 (TSBldg)
03/19/2018 06:00 PM LABOR & COMMERCE
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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.