SB 121-HEALTH INSURANCE ALLOWABLE CHARGES  3:40:37 PM CHAIR DUNBR reconvened the meeting and announced the consideration of 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." 3:40:59 PM CHAIR DUNBAR solicited a motion. 3:41:02 PM SENATOR GIESSEL moved to adopt Amendment 1, work order 34- LS0282\N.1. 34-LS0282\N.1 Wallace 3/12/25 A M E N D M E N T 1 OFFERED IN THE SENATE BY SENATOR GIESSEL TO: SB 121 Page 2, line 14, following "rates": Insert "for an allowable charge under (a) of this section" 3:41:12 PM CHAIR DUNBAR objected for purposes of discussion. 3:41:21 PM JANE CONWAY, Staff, Senator Cathy Giessel, Alaska State Legislature, Juneau, Alaska, offered an explanation of the amendments for SB 121. She noted that on page 2, line 14, following the word "rates" was inserted "for an allowable charge." She stated that the amendment establishes that out-of- network providers receive the same reimbursement for the same codes as in-network providers, while allowing in-network providers to negotiate rates through contracts with insurers. 3:42:37 PM SENATOR HUGHES sought verification of whether the amendment is establishing a requirement. 3:42:47 PM MS. CONWAY replied that the amendment would require the same reimbursement for the same CPT code regardless of the provider. 3:43:11 PM SENATOR HUGHES asked whether the amendment affected the ability of in-network physicians to negotiate higher payment than other clinician types for the same CPT code. 3:43:30 PM MS. CONWAY replied yes, it is a possible. 3:43:41 PM SENATOR HUGHES asked whether equal protection raised a legal issue if an advanced nurse practitioner or physician assistant (PA) in network received a lower negotiated payment than the same clinician type out of network. 3:44:09 PM MS. CONWAY replied the question is beyond her expertise. 3:44:29 PM SENATOR GIESSEL stated that SB 121 addresses reimbursement for out-of-network providers and does not affect negotiated in- network contracts. 3:44:52 PM CHAIR DUNBAR stated that the issue raised appeared practical rather than constitutional and likely did not implicate equal protection because the payments resulted from arms-length negotiations. 3:45:15 PM SENATOR CLAMAN said the legislation applies only to out-of- network charges and does not affect in-network rates, which are determined through contract negotiations, including any differences in payment for different clinician types. 3:46:00 PM SENATOR HUGHES stated that she is concerned that paying nurse practitioners and PAs the same as physicians for the same service may undervalue physicians' greater training and expertise, reduce incentives for efficiency, and eliminate a cost-saving advantage PAs and nurse practitioners provide in rural care. She suggested a slightly lower rate for PAs and NPs could be more appropriate. 3:48:28 PM CHAIR DUNBAR removed his objection and asked whether there were further questions. 3:48:40 PM SENATOR HUGHES asked for a recap of the purpose for Amendment 1 (N.1). 3:49:09 PM MS. CONWAY clarified that the purpose for Amendment 1 was that legislation applies only to out-of-network providers and does not affect in-network negotiations. SENATOR CLAMAN stated that the amendment aligns the language with the bill's original intent, ensuring consistency. CHAIR DUNBAR asked if Senator Hughes maintained her objection. 3:49:43 PM SENATOR HUGHES replied no. 3:49:48 PM CHAIR DUNBAR found no further objection and Amendment 1 (N.1) was adopted. 3:49:51 PM CHAIR DUNBAR solicited a motion. 3:49:55 PM SENATOR GIESSEL moved to adopt Amendment 2, work order 34- LS0282\N.2. 34-LS0282\N.2 Wallace 3/12/25 A M E N D M E N T OFFERED IN THE SENATE BY SENATOR GIESSEL Page 1, line 14: Delete "and must be the same across the state" Insert ", must be the same across the state, and be the greater of the allowable charge or 450 percent of the federal Centers for Medicare and Medicaid Services fee schedule for the state in effect at the time of delivery of the health care service or supply" Page 2, lines 4 - 7: Delete "Allowable charges for primary care providers must be the greater of the allowable charge or 450 percent of the federal Centers for Medicare and Medicaid Services fee schedule for the state in effect at the time of delivery of the health care service or supply." 3:50:01 PM CHAIR DUNBAR objected for purposes of discussion. 3:50:06 PM MS. CONWAY explained Amendment 2 (N.2). She said SB 121 specifies 450 percent of CMS Medicare rates, and the intent was for all providers to have 450 percent floor as a minimum. To achieve this, on page 1, line 14, "and must be the same across the state" was deleted and inserted "must be the same across the state and be greater of the allowable charge or 450 percent of the CMS Medicare and Medicaid Services fee schedule in effect at the time of service delivery." Consequently, page 2, lines 47, was removed, which previously applied only to primary care, since the floor now applies to all providers. 3:51:31 PM SENATOR HUGHES asked whether the original bill applied the 450 percent rate only to primary care, but as amended extends to all medical care providers. MS. CONWAY replied correct. 3:51:52 PM SENATOR HUGHES said Amendment 2 is a very big expansion and said she wanted to maintain her objection because an analysis is needed on how the change would impact small businesses and 15 percent of the population. She stated her belief that rates would increase considerably, impacting the cost of insurance. 3:52:26 PM CHAIR DUNBAR removed his objection and asked if Senator Hughes maintains objection. 3:52:36 PM SENATOR HUGHES replied yes. CHAIR DUNBAR asked for further discussion. 3:52:42 PM SENATOR GIESSEL explained that after the repeal of the prior reimbursement rule, no minimum payment floor was established, leading to sharply reduced reimbursement rates for primary care cliniciansdown to about 145 percent of Medicare, which is already low and potentially declining further. As a result, clinics are struggling to cover rising costs such as supplies, staffing, and billing services, and some have had contracts canceled or renegotiated at unsustainable rates. She said these pressures are causing clinic closures, difficulty recruiting physicians, and long-standing family-run practices becoming unsellable. The purpose of establishing a 450 percent Medicare floor is to stabilize reimbursement, keep primary care clinics financially viable, and maintain access to healthcare for Alaskans. 3:55:18 PM SENATOR HUGHES stated that while the sponsor's goal is to ensure adequate reimbursement for primary care, the expansion would apply the floor to all medical providers, including specialists, with unknown impacts on costs. She is concerned this could increase premiums for insured Alaskans and cannot support SB 121. 3:56:26 PM CHAIR DUNBAR found the objection was maintained and asked for a roll call vote. A roll call vote was taken. Senators Giessel, Tobin, Claman, and Dunbar voted in favor of Amendment 2 (N.2) and Senator Hughes voted against it. The vote was 4:1. CHAIR DUNBAR announced that Amendment 2 was adopted on a vote of 4 yeas and 1 nay. 3:57:34 PM CHAIR DUNBAR opened public testimony on SB 121; finding none, he closed public testimony. 3:57:49 PM CHAIR DUNBAR asked for closing comments. 3:58:01 PM SENATOR CLAMAN said he viewed SB 121 as important. He expressed frustration with the lack of transparency in how reimbursement rates are set and disclosed by insurers and state agencies. He noted difficulty obtaining meaningful rate information and related this difficulty to the confusion over medical bills that consumers face. He criticized the punitive nature of the current 185 percent Medicare out-of-network rate. He said he is concerned about whether a 450 percent Medicare floor could exceed existing contract rates, noting that supporters claim it would not, but he lacks sufficient data to make an informed decision. 4:00:53 PM SENATOR CLAMAN said he is unconvinced that 450 percent of Medicare is always below contract rates and wants clearer, procedure-specific data to evaluate the impact. He supported the bill's advancement and praising its design but stressed the need for transparent rate comparisons to ensure out-of-network payments do not exceed in-network rates. He cited broader frustration with the lack of accessible healthcare cost information. 4:02:16 PM SENATOR HUGHES stated her concern that reinstating a reimbursement floor so soon after repealing the 80th percentile rule could again drive-up healthcare costs. She noted historical cost increases and questioning how the percentile rule was previously characterized. She emphasized that the affected population is largely small business owners who already struggle to provide insurance and warned that SB 121 lacks sufficient data and clarity on several technical issues. She acknowledged the need for providers and access to care, she argued the proposal is premature, undermines free-market principles, and could harm Alaskans without further analysis and dialogue among insurers and providers. 4:06:06 PM SENATOR GIESSEL noted that past analyses, including Milliman studies, showed specialists such as orthopedists were reimbursed well above Medicare without causing excess payments and that high healthcare costs in Alaska are driven more by insurance expenses than provider reimbursement. She argued SB 121 would protect patients from high out-of-network bills, encourage providers to join networks, and ultimately protect both clinicians and consumers. 4:08:52 PM CHAIR DUNBAR solicited the will of the committee. 4:08:55 PM SENATOR GIESSEL moved to report SB 121, work order 34-LS0282\N, as amended, from committee with individual recommendations and attached fiscal note(s). 4:09:10 PM CHAIR DUNBAR found no objection and CSSB 121(HSS) was reported from the Senate Health and Social Services Standing Committee.