Legislature(2025 - 2026)BELTZ 105 (TSBldg)
01/30/2026 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB78 | |
| SB121 | |
| SB163 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 78 | TELECONFERENCED | |
| += | SB 121 | TELECONFERENCED | |
| *+ | SB 163 | TELECONFERENCED | |
SB 121-HEALTH INSURANCE ALLOWABLE CHARGES
[CSSB 121(HSS) was before committee.]
1:38:58 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of CS FOR SENATE BILL NO. 121 "An Act relating to
settlement of health insurance claims; relating to allowable
charges for health care services or supplies; and providing for
an effective date."
1:39:23 PM
SENATOR CATHY GIESSEL, District E, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 121 stated that this bill
addresses health care access and affordability by setting
minimum reimbursement rates for out-of-network clinicians. It
builds on prior efforts to ensure insurers pay a defined amount
for services provided by clinicians who are not contracted with
them, establishing a clearer baseline for payment and
negotiation. She gave an example of how SB 121 would work with
two different clinics. She said the bill aims to set a standard
reimbursement rate for out-of-network clinicians, providing a
baseline for negotiations with insurers. It includes a benchmark
based on the 75th percentile and works alongside network
adequacy requirements to ensure insurers offer a sufficient
range of in-network providers. Following interim discussions,
these elements were combined into the current committee
substitute before you.
1:44:53 PM
CHAIR BJORKMAN solicited a motion.
1:44:54 PM
SENATOR GRAY-JACKSON moved to adopt the committee substitute
(CS) for SB 121, work order 34-LS0282\G, as the working
document.
1:45:04 PM
CHAIR BJORKMAN objected for purposes of discussion.
1:45:10 PM
JANE CONWAY, Staff, Senator Cathy Giessel, Alaska State
Legislature, Juneau, Alaska, provided the summary of changes
from version I to version G for SB 121 and paraphrased the
following:
[Original punctuation provided.]
New Section 1 - Version G amends AS 21.07 by adding a
new section AS 21.07.035: Minimum provider network
standards to the bill.
Section 2 (formerly Section #1 in version I)
Standards for settlement of health insurance claims
This section amends AS 21.36.497 by removing the
verbiage from subsection(a) pertaining to the 75th
percentile as a standard for reimbursement for out-of-
network providers. However, subsection (a) still
contains the language for the 450 percent of the CMS
fee schedule for Medicare as the minimum allowable
charge. Subsections (b) (c) and (d) remain the same
from I to G.
New Section 3 - is a repeal of AS 21.07.020(3)
language that is no longer needed because of the
addition of language in Section 1 covering network
standards.
Section 4 - is the same transition language (formerly
Section 3 in version I)
Section 5 - is the effective date of the bill
(formerly Section 4 in version I)
1:47:48 PM
SENATOR YUNDT stated that health insurance is complex and
requires careful handling, with ongoing efforts needed to
improve it. He asked for how this proposal will benefit
consumers, help control costs, and maintain market stability.
1:48:17 PM
SENATOR GIESSEL replied that access to care in Alaska is
declining as reimbursements have dropped, leading to clinic
closures and clinicians leaving the state. SB 121 sets a minimum
reimbursement rate for out-of-network providers, giving in-
network clinicians' leverage to negotiate fairer payments and
remain financially viable. The bill also includes network
adequacy requirements to ensure patients have multiple provider
options, improving access while supporting a stable health care
system.
1:51:38 PM
CHAIR BJORKMAN [removed his objection]; found no further
objection and CSSB 121 was adopted as the working document.
1:51:51 PM
CHAIR BJORKMAN announced invited testimony on SB 121.
1:52:04 PM
JEFF DAVIS, Owner, Weston Group Consulting, Wenatchee,
Washington, testified by invitation on SB 121 and paraphrased
the following:
[Original punctuation provided.]
I am quite familiar with these issues with 40 years of
healthcare and health insurance experience in AK.
President of PCBSAK for 18 years. During my tenure
with Premera had many discussions with the DOI about
th
how to improve the 80 percentile regulation but we
never suggested repeal without replacement as there
were benefits from the regulation. I could talk with
you for an hour about this but have done my best to
keep my remarks short, but please ask questions if any
of this doesn't make sense or if I left out something
important to you.
SB 121 is a consumer protection bill that replaces the
protections that were in place for 20 years under the
th
repealed 80 percentile regulation plus proactively
prevents access issues when narrow network products
are eventually introduced.
Specifically, SB 121 does two things:
1. Ensures Alaskans get the health insurance benefits
they paid for.
2. Helps protect access to physicians and other
providers in Alaska.
How does this bill ensure people get the benefits they
paid for?
1. Insurers don't automatically pay based on a
provider's charges.
2. If there is no contract, someone decides if the
charge is reasonable.
a. Under the repealed regulation, a state defined
rule was in place for determining reasonable.
b. After repeal, the insurers decided what was
reasonable. Largest chose a standard which is about
half of what was in place under the regulation.
3. In most cases, this means the insurer now pays
much less than what it paid under the regulation and
the patient pays more! The value of the policy they
bought is decreased. The consumer is not getting what
they paid for!
4. SB 121 reestablishes a State determined rule for
deciding what a reasonable charge is. That protects
the consumer!
1:54:37 PM
MR. DAVIS continued with his testimony of SB 121:
[Original punctuation provided.]
How does this bill protect access to providers? Three
ways
1.First, if a patient chooses a non-contracted
provider, the insurance payment would be based on
what is reasonable in Alaska, not some lower cost
location
a. This supports the patient's ability to choose the
doctor they think is best for them.
2. Second, this bill supports fair payment to
providers by establishing what is reasonable based on
charges in Alaska not an arbitrary fee schedule or
data from other states. Why does that matter?
a. Fair payment is needed to keep physicians and
other providers in Alaska!
i. Many Alaska providers are in financial
trouble and in danger of closing their
practices. Here are a few or the reasons: (Dr.
Merkouris example)
1. Insurance contract rates have been flat or
gone down over the last few years
2. Medicare rates are down 33 percent.
3. Medicaid rates in Alaska are now equal to
Medicare
4. Medicare and Medicaid patients now make up
a larger proportion of the population
5. In the face of declining or flat revenue
sources, the cost of support staff is up 47
percent in last 10 years
6. Result - take home pay for physicians
amongst lowest in the nation and their
practices are struggling, and
7. Practices are unable to recruit to replace
providers who retire or leave
b. This bill promotes also fair payment by bringing
more balance to contract negotiations
i. Before repeal, insurers would already not
agree to contract increases they knew they had the
upper hand
1:56:47 PM
MR. DAVIS continued with his testimony of SB 121:
[Original punctuation provided.]
ii. After repeal, with increased power, insurers
immediately began demanding steep decreases as much
as 28 percent!
iii. In other words, repeal without replacement
weakened providers negotiating power and they were
already the underdogs
3. Third, this bill proactively sets minimum network
standards before narrow networks come to Alaska
a. A narrow network product is one that provides
little or no payment for non-network providers
b. Narrow networks are not in Alaska today but are
widely used in the Lower 48 and some include as few
as 16 percent of the providers in the area.
c. This means patient choice and access are
significantly limited.
d. Insurers use narrow networks to drive down
contract rates by pitting provider groups against
each other in a bidding war which would make the
current crisis worse.
e. The NAIC has stated network minimums are amongst
the most important thing a State can do to preserve
well-functioning healthcare and health insurance
markets. 38 states have adopted some form.
f. The minimum standards proposed in SB 121 reflect
the unique geography and distribution of people and
providers in Alaska and the already fragile state of
the provider community.
g. All of Alaska is a federally designated
healthcare professional shortage area. Without
minimum standards, narrow networks would make the
situation worse.
h. Action is needed now as at least one major
insurer has stated their desire to bring narrow
network products to AK.
In Summary, SB 121 is needed to protect consumer's
pocketbooks and access to needed healthcare.
1:59:48 PM
SENATOR DUNBAR stated that this is now a combined bill and asked
if Mr. Davis could explain how the rules on narrow network
enforcement would work.
2:00:14 PM
MR. DAVIS replied that enforcement would be handled by the
Division of Insurance. Carriers must demonstrate compliance with
network standards when filing their plans. If the carriers
cannot meet the requirements, SB 121 allows for a phased
implementation period and permits the director to grant
temporary exceptions when justified.
2:01:01 PM
SENATOR DUNBAR asked if insurers must obtain approval from the
Division of Insurance before bringing a product to market.
2:01:31 PM
MR. DAVIS replied that it is correct and said insurers must file
their products and obtain approval before offering regulated
insurance plans in Alaska.
SENATOR DUNBAR asked what similar efforts have worked in other
states and is this enforcement approach consistent with the
other states.
MR. DAVIS replied that the enforcement mechanisms are largely
consistent with the model legislation from the National
Association of Insurance Commissioners. He said most of the 30
states and territories with these standards follow that model
closely, though definitions of minimum requirements vary by
state based on factors like population density.
2:02:55 PM
CHAIR BJORKMAN asked if providers are guaranteed a set
reimbursement rate out of network, then what incentive do the
providers have to join insurance networks and sign contracts.
2:03:38 PM
MR. DAVIS replied that there are several incentives for
providers to remain in-network. Insurers typically reimburse a
higher percentage of costs for in-network providers, making it
easier to collect payments from insurers rather than patients.
He said being in-network also helps retain patients, as out-of-
network care is more expensive and burdensome for them.
Additionally, in-network providers benefit from better support
from insurers and visibility in provider directories. Overall,
most providers still prefer to stay in-network and negotiate
reasonable rates rather than operate outside the network.
2:07:37 PM
CHAIR BJORKMAN said over the life span of the 80th percentile
rule there was a time when there was an overwhelming number of
out-of-network providers. He asked what action caused providers
to change from out-of-network to in-network.
MR. DAVIS stated his belief that between 2004 and 2014, Alaska
saw a significant increase in providers, largely due to the 80th
percentile rule, which stabilized reimbursements and made the
market more financially predictable. He said this led to a
roughly 40 percent rise in physician offices and encouraged
providers to join networks, especially as competition grew and
studies highlighted higher compensation levels in the state.
2:11:12 PM
CHAIR BJORKMAN asked is there anything that would prevent an
out-of-network provider from charging more than the proposed 450
percent benchmark of Medicare.
MR. DAVIS replied no, out-of-network providers can charge any
amount, but insurer payments are capped by the set standard,
leaving patients potentially balance billed for the difference.
This practice is unpopular. In contrast in-network providers
must accept contracted rates as full payment with no balance
billing.
2:13:58 PM
CAROLYN RHENE MERKOURIS, MD, Denali OB-GYN, Anchorage, Alaska,
testified by invitation on SB 121 and read the following:
[Original punctuation provided.]
Thank you for the opportunity to speak today.
I'm here as a physician who practiced in Alaska for
many years and who loved caring for patients here. I
want to share how the loss of Alaska's 80th percentile
rule affected me not in theory, but in real life.
When that rule stopped being enforced, the impact was
immediate. In the fall of 2024, my reimbursement
dropped significantly, even though I saw the same
number of patients and providing the same level of
care.
Alaska is an expensive place to run a medical
practice. After paying rent, malpractice insurance,
supplies, and my employees people who support
families and communities I found myself losing money
simply by staying open. About every three months, I
was having to put my own money into the practice just
to keep it going.
At the same time, the demand for care didn't slow
down. In OB-GYN, patients don't get put on pause.
Pregnancies, emergencies, and complications keep
coming, and they require time, attention, and constant
availability.
The financial strain, combined with the emotional and
physical demands of patient care, became overwhelming.
Not because I didn't want to keep working but
because the system no longer made it possible to do so
sustainably.
Eventually, I made the difficult decision to retire
earlier than I ever planned. That decision wasn't just
hard for me it meant fewer options for patients who
were already struggling to find care.
Today, I still practice medicine, but I do it out of
state as a locum physician. Alaska lost a doctor not
because the need disappeared, but because the math
stopped working.
When we talk about reimbursement policies, we're
really talking about access to care, about whether
physicians can stay, and about whether communities can
depend on having doctors when they need them.
I hope my story helps put a human face on this issue
because these decisions affect real people, on both
sides of the exam room.
2:17:08 PM
TERESA LYONS, President, Advanced Practice Registered Nurse
Alliance (APRN), Anchorage, Alaska, testified by invitation on
SB 121. She provided the following testimony:
[Original punctuation provided.]
My name is Teresa Lyons and I am an Advanced Practice
Registered Nurse (APRN). I am here today as the
President of the APRN Alliance an umbrella
organization made up of the four specialty areas of
advanced practice nursing. Our Alliance represents
over 2600 Advanced Practice Registered Nurses (APRN's)
in the State of Alaska. Of this number, a majority
(approximately 2400) are Certified Nurse Practitioner
(CNP's) who are practicing in primary care settings
oftentimes in rural and frontier locations and
ensuring access to wellness care, chronic disease
prevention and management and urgent care. APRN's are
members of the health care delivery system and
practice autonomously in areas such as family
practice, behavioral health, women's health care,
obstetrics, pediatrics, internal medicine, geriatrics,
cardiology, and oncology. CNPs are qualified to
diagnose and treat patients with undifferentiated
symptoms as well as those with established diagnoses.
In addition, there are over 150 Certified Registered
Nurse Anesthesiologists who deliver anesthesia care in
all rural hospitals in the state and in many instances
are the only health care providers doing so ensuring
access to care in these critical access hospitals.
Over 100 certified nurse midwives provide access to
prenatal, obstetrical, postpartum and women's health
care in urban and rural areas of our state. Our
Clinical Nurse Specialists (CNS) are approximately 50
in strength and serve in our hospitals and
rehabilitation units throughout the State.
Recission of the 80 percent rule has had a significant
impact on small practice owners like me. I started a
private mental health practice in 2012 in Fairbanks,
expanded to Kenai in 2021 and to Anchorage in 2024. I
employ 14 employees 6 of which are APRNs all
nationally board certified in psych/mental health.
Between the three practice sites in Alaska, we see an
average of 200 patients a week and over 10,000 client
visits a year. We serve people as young as 3 years of
age and currently our eldest is 98 years old. We are
Medicaid, Medicare providers. Accepting most major
health insurances including commercial carriers.
2:19:22 PM
MS. LYONS continued with her testimony of SB 121:
Like many of my colleagues, the practice has been both
in and out of network finding both situations
financially unstable. When in network, the
reimbursements are dictated as opposed to negotiated
and are frequently changed throughout the year with
minimal notification. Our reimbursement experience has
been as low as 160 percent-185 percent of Medicare, in
network. This level of reimbursement does not allow
for the sustainability of a business. Being out of
network offers no better options with no floor
established for reimbursement. Many of my colleagues
in private practice have experienced the same. This
results in practices closing and decreasing access to
care for patients.
This bill provides for a comprehensive menu of
providers to ensure greater access including APRNs. A
statistically credible methodology for setting
allowable charges when out of network. Assure
uniformity and equity in the application of
reimbursement rates applied for health care services
when billed under the same Current Procedural
Terminology code by health care providers who are
practicing under the scope of their license and
authorization by their respective professional state
board.
We thank you again for hearing this bill and the APRN
Alliance stands in full support to pass this bill out
of your committee.
2:22:27 PM
CHAIR BJORKMAN asked her to clarify if reimbursements were about
165 percent of Medicare before the repeal of the 80th percentile
rule.
MS. LYONS replied yes, while in-network. She chose contracts to
help her clients. She found there was little room to negotiate,
and reimbursements were reduced over time. The bigger challenge
is not a lack of patients, but difficulty attracting and
retaining clinicians in Alaska.
2:24:03 PM
KARL BAURICK, MD, FACOG Interior Women's Health, Fairbanks,
Alaska, testified by invitation on SB 121. He referred to a
slide with a bar graph showing reimbursement, which he provided
for the committee. He said the clinic relies heavily on
obstetric services to operate. Since the repeal of the 80-
percentile rule, reimbursements have dropped significantly by
about 20 percent for hospital-based care and 15 percent for
clinic procedures, while costs and staff wages have risen. He
said additional cuts to mid-level provider reimbursements and
payments below cost for some supplies have further strained
finances. SB 121 would not fully restore prior conditions but
would help improve negotiations and sustainability, as current
reimbursement levels are not viable for maintaining care.
2:28:57 PM
DEBBIE RYAN, Chief Executive Officer, Alaska Chiropractic
Society, Anchorage, Alaska, testified by invitation on SB 121
and read the following:
[Original punctuation provided.]
I am a co-owner of a chiropractic clinic with a 70+-
year legacy of serving Alaskans. For transparency, I
also serve as the CEO of the Alaska Chiropractic
Society, representing chiropractic physicians
statewide and working to protect patient access to
conservative care.
In that role, I hear far too often from providers who
are retiring early, leaving Alaska, or unable to repay
student loans (which can be as much at $250,000) or
support their families because they simply cannot make
a living practicing health care in this state anymore.
Nor are we attracting new younger providers to Alaska.
Today, I am here to speak about how insurance affects
health care, not only for providers, but for patients.
When you look at the full picture, both sides of the
health-care equation are under serious strain.
Let me share a few real-world facts directly from my
office.
MS. RYAN continued with her testimony of SB 121:
[Original punctuation provided.]
First, deductibles are extremely high. The highest
deductible I have seen is $6,350, with coverage at 80
percent only after that deductible is met. For
conservative care like chiropractic services, this
often means patients pay 100 percent out of pocket,
despite paying significant monthly premiums. For
patients with a straight co-pay, some of these co-pays
are $85 and the insurer pays nothing.
Second, Alaska has a dominant health insurer that
functions as a monopoly. Over ten years ago, that
insurer implemented major fee schedule reductions-some
services were reduced by as much as 60 percent-while
premiums have remained strong. Providers today are
being paid less than they were 20 years ago.
When I reviewed my 2025 billings, that insurer paid
only 36 percent of all claims submitted by my office.
Patients paid 35 percent of the charges, in addition
to their premiums. As an in-network provider, my
office was required to write off 29 percent of all
charges submitted, nearly one-third of the care we
provided, because of contractual obligations.
Let me be clear: our services are not expensive and
not excessive.
You may ask why we remain in network. The answer is
simple: many insurance plans in Alaska provide no
coverage at all if a patient sees an out-of-network
provider. Providers are effectively forced to stay in
network just to serve their patients.
Let me give you one concrete example of what "insured"
care looks like today.
For a common chiropractic service CPT code 98940, our
office charges $78. The insurance company allows
$45.10. We are required to write off$32.90. The
patient pays a $35 copay, and the insurance company
pays $10.10.
The patient paid most of the cost, plus their monthly
premiums. From my perspective, that is not meaningful
insurance coverage.
Years ago, the State recognized these issues and
implemented percentage-based safeguards for out-
of-network reimbursement. That system allowed
providers to assess whether staying in network was
sustainable or whether they needed to go out of
network to survive.
When that safeguard was removed, control shifted
entirely back to the insurer. Reimbursement is now
dictated solely by internal
2:33:34 PM
MS. RYAN continued with her testimony of SB 121:
[Original punctuation provided.]
fee schedules and payment policies. The result has
been predictable: providers retiring early, closing
practices, or leaving Alaska.
Health care is a business, like any other. Providers
face rising costs for labor, rent, supplies, taxes,
and compliance. Small practices must compete with
hospitals and large systems for the same workforce. We
often train staff only to lose them to larger
organizations that can offer better wages and
benefits. Because the cost of doing business has grown
and reimbursements have diminished, I currently
operate with half the support staff I once had.
This is why SB 121 matters.
If SB 121 passes, it will:
- Protect patient choice by making Alaska a more
viable place for health-care providers to practice and
remain.
- Allow providers to make informed decisions about
whether being in network with strict fee limitations
or operating out of network with predictable
reimbursement which is sustainable; and
- Use Medicare as a benchmark, adjusted by a
reasonable percentage, which is a fair and transparent
reference since Medicare evaluates costs annually.
Members of the Committee, SB 121 addresses a real and
urgent problem in Alaska's healthcare system. I urge
you to ensure the final policy is data-driven,
reasonable, and sustainable, so we can protect
patients, retain providers, and preserve access to
care.
2:38:08 PM
CHAIR BJORKMAN asked how chiropractic physicians operated prior
to the widespread use of insurance.
2:39:07 PM
MS. RYAN replied that chiropractic services are widely covered
by most insurers but are limited under Medicare and Medicaid due
to federal restrictions. Medicaid coverage is especially narrow,
leaving many patients without access and forcing referrals to
more expensive care like emergency rooms. Expanding coverage
could improve access, reduce costs, and support effective,
conservative treatment options in Alaska.
2:42:48 PM
SENATOR GIESSEL said health insurance premiums have risen while
clinician reimbursements have sharply declined, creating a
crisis in Alaska's health care system. SB 121 aims to establish
a minimum reimbursement rate to give providers leverage in
negotiations, help retain clinicians, and support primary care
access. While 450 percent of Medicare is proposed, she is open
to adjusting the rate, emphasizing the need to stabilize the
system and reduce reliance on temporary providers.
2:46:02 PM
SENATOR YUNDT asked for Senator Giessel to come back with
numbers from the last four or five years that show health
insurance costs in Alaska.
2:46:54 PM
SENATOR GIESSEL replied that she would.
2:47:03 PM
CHAIR BJORKMAN stated that rising health care costs are evident
in both insured and self-insured markets, indicating broader
systemic issues beyond insurers alone. Contributing factors
include past reimbursement policies, the growing influence of
pharmacy benefit managers, and low Medicare and Medicaid rates
that shift costs into premiums. He said with potential federal
cuts ahead, the outlook for costs, and access is increasingly
concerning.
[CHAIR BJORKMAN held SB 121 in committee.]