SB 122-HEALTH INSURANCE NETWORK STANDARDS  4:16:04 PM CHAIR DUNBAR reconvened the meeting and announced the consideration of SENATE BILL NO. 122 "An Act relating to insurance; establishing standards for health insurance provider networks; and providing for an effective date." 4:16:27 PM CHAIR DUNBAR opened public testimony on SB 122. 4:16:55 PM GARY STRANNIGAN, Vice President, Congressional and Legislative Affairs, Premera Blue Cross Blue Shield of Alaska, Everett, Washington, testified in opposition to SB 122 and paraphrased the following: [Original punctuation provided.] At Premera, we feel that efforts to promote the affordability of our products are key to continuing to be able to provide care for our customers. This is because affordability has become the highest bar a person must clear, in order to gain access to health insurance and health care services. SB 122 would put in place the most restrictive network adequacy system of any state in the United States. If (a big if) a carrier could actually comply with the measure's provisions, it would certainly be at a very high cost. Invited testimony from Mr. Jeff Davis indicated that this bill is intended to address a problem that does not yet exist: narrow networks in Alaska. Premera has the broadest network of any carrier in the state and we don't foresee a narrow network in our future. Further, from what we can tell, our competitors don't employ narrow networks either. This bill is not needed. 4:17:59 PM MR. STRANNIGAN continued with his testimony for SB 122: Mr. Davis also suggested to the committee that there are no network adequacy requirements in place in Alaska. While it is true that Alaska is one of 18 mostly rural states that does not have a state- specific set of requirements for network adequacy, the federal government does have network adequacy requirements for Qualified Health Plans (QHPs) under the Affordable Care Act (ACA) including those that serve Alaskans. Premera complies with these requirements for our individual health plans, and by extension, the rest of our lines of business do so as well. This is because we essentially have one (compliant) network for all our products To touch on a few of the bill's problematic provisions: -In the case of both the 100 percent threshold for facilities, and the 95 percent threshold for specialty providers, virtually every provider will have the opportunity to hold a health plan hostage. The provider will be able demand whatever rate they want. If the health plan would like to do business in Alaska, the health plan must agree. This provision will have an upward spiraling effect on costs, if not completely crash the health insurance marketplace all it would take to disqualify a carrier is for one provider to refuse to contract and that carrier does not comply. This is to say nothing of the small subset of providers to do not, under any circumstances contract with insurance companies. Would they also carry a veto over health carriers? Under the bill, carriers would need to contract with 95 percent of specialty and subspecialty providers in an area. In many instances, the number of specialty and subspecialty providers in an area can be counted on one hand. Mathematically, a carrier would need to contract with five out of five providers and if just one declines, that carrier does not meet the 95 percent threshold and is disqualified from doing business in Alaska. -There is no exception in the bill for poor quality providers/facilities or those providers who have previously been excluded from a carrier network due to fraud concerns. By requiring carriers to contract with them, it will subject members to potentially low- quality care and/or fraudulent behavior. In conclusion, we urge the legislature to set SB 122 aside and instead focus on the countless other, in many cases, serious, pressing problems currently confronting the Alaska legislature. There is no sense investing effort in a problem that is purely theoretical; especially when the proposed solution is so costly. 4:19:29 PM SENATOR HUGHES noted that the proposal may impose one of the strictest network adequacy standards in the nation and asked what the federal requirements are for the Affordable Care Act. 4:19:51 PM MR. STRANNIGAN said he is hearing two questions. One question is about the network adequacy requirements under the Affordable Care Act and the second question is about the state requirements. 4:20:14 PM SENATOR HUGHES replied that she primarily wants to know the federal requirements and how Alaska compares to other states if SB 122 is passed. 4:20:34 PM MR. STRANNIGAN said the proposal would set uniquely strict network adequacy standards, including a 100 percent requirement for facilities and a 95 percent requirement for specialties, effectively forcing insurers to contract with nearly all providers. He noted that no other state has comparable requirements and offered to provide information on Affordable Care Act standards if requested. 4:21:56 PM SENATOR HUGHES requested the additional information. 4:22:00 PM SENATOR CLAMAN said the bill is often described as a narrow network bill. He asked whether there are states with narrow network laws that are acceptable from an insurance perspective, or as a representative of Premera are all narrow network bills unacceptable. 4:22:28 PM MR. STRANNIGAN replied that Premera operates in Washington and Alaska, with Washington's insurance department proud of its robust network adequacy laws. He suggested there is currently no need for narrow network laws in Alaska if there are no narrow networks. He offered to research narrow network laws to provide a clearer overview of available options. 4:23:33 PM SENATOR CLAMAN asked if he could provide an overview in a couple of days. MR. STRANNIGAN replied that he could deliver some data in a few days. 4:24:10 PM CHAIR DUNBAR closed public testimony on SB 122. 4:24:23 PM CHAIR DUNBAR held SB 122 in committee.