SB 219-PRIOR AUTH EXEMPT FOR HEALTH PROVIDERS  1:42:31 PM CHAIR BJORKMAN reconvened the meeting and announced the consideration of SENATE BILL NO. 219 "An Act relating to utilization review entities; exempting certain health care providers from making preauthorization requests for certain services; and providing for an effective date." 1:43:15 PM SENATOR DAVID WILSON, District N, Alaska State Legislature, Juneau, Alaska, sponsor of SB 219, provided the following statement for SB 219: [Original punctuation included.] Sponsor Statement Senate Bill 219 "An Act relating to utilization review entities; exempting certain health care providers from making preauthorization requests for certain services; and providing for an effective date." SB 219 aims to reduce the wait time for certain health care services by exempting qualified health care providers from making preauthorization requests for said services. Currently, Alaskans who need certain health care services must wait days or weeks to get preauthorized to receive health care services because of the processing time between the health care provider and insurance companies. This bill would help Alaskans receive health care services immediately, especially health care services that could save their lives. Health care providers shall qualify for a prior authorization exemption if at least 80 percent of prior authorization requests submitted in the past 12- month period were approved for that health care service. Utilization review entities will provide exempted health care providers with a list of health care services for which the exemption applies and the duration of the exemption. This helps eliminate unnecessary delays in care by granting providers exemptions who have demonstrated consistent adherence to approval guidelines from prior authorization requirements. Other states with prior authorization exemptions have seen increased frequency of patients who receive the health care services they need and help eliminate unnecessary delays in care. This bill will help Alaskans receive fast, efficient, and quality healthcare when they need it without waiting for a preauthorization process that could cause their health to decline even more. Please contact Julia Fonov in my office at (907) 465- 4711 or Julia.Fonov@akleg.gov for any questions. 1:45:47 PM CHAIR BJORKMAN asked whether "80 percent approval for prior authorizations" is the right number or the right thing to measure. He asked whether insurance companies are incentivized to deny doctors' prior authorization requests so that doctors wouldn't qualify. He suggested the approval standards should be higher than 80 percent. He also suggested that a better measure might be on the back end if claims and care given was paid out because the care was in line with the industry standard and the medical necessity for a patient. 1:46:55 PM SENATOR WILSON suggested the people prepared to provide invited testimony could speak to the experience of other states with the 80 percent threshold. He said it was the intent with SB 219 to apply the 80 percent threshold after claims have been processed, so there would not be the issue of claims being denied in order to disqualify a practitioner. He said SB 219 is modeled after legislation in other states. He anticipated testimony on experience with the "back end" of claims. 1:47:55 PM JULIA FONOV, Staff, Senator David Wilson, Alaska State Legislature, Juneau, Alaska, presented the sectional analysis for SB 219. [Original punctuation included.] Sectional Analysis Senate Bill 219 v. A "An Act relating to utilization review entities; exempting certain health care providers from making preauthorization requests for certain services; and providing for an effective date." Section 1: Amends AS 21 (Insurance) .07 (Patient  Protections Under Health Care Insurance Policies) .005  (Regulations relating to health care insurance  policies). Page 1, line 5, through line 14: Adds processes for the Director of Insurance to adopt regulations for utilization review entities, who are individuals that perform prior authorization, as established under section 2 of this bill. Section 2: Adds a new section .100 (Utilization review  entities) to AS 21 (Insurance) .07 (Patient  Protections Under Health Care Insurance Policies)  Page 2, line 1 through line 7: Adds section (a) which explains a healthcare provider is not required to complete prior authorization for a covered person if at least 80 percent of prior authorization requests submitted by the provider for that health care service have been approved in the past 12 months. Page 2, line 8 through line 12: Adds section (b) which explains a health care provider may be evaluated if they continue to qualify for an exemption not more than once every 12 months, and an existing exemption is not required to be evaluated and a longer exemption period may be established. Page 2, line 13 through 14: Adds section (c) which explains health care providers do not have to request an exemption to qualify for an exemption. Page 2, line 15 through 20: Adds section (d) which explains if a health care provider is denied an exemption, they may request evidence once every 12 months on why they were denied an exemption and an explanation of how to appeal the denial, and the health care provider may appeal the denial. Page 2, line 21 through line 30: Adds section (e) which explains utilization review entities may revoke an exemption after 12 months if: (1) they determine the health care provider does not meet the 80 percent approval criteria based on a review of the claims for the health care service for which the exemption applies, (2) they provide the health care provider with the information used to determine revoking the exemption, (3) they explain to the health care provider how to appeal the determination. 1:50:05 PM MS. FONOV continued the sectional analysis. Page 2, line 31 through page 3, line 3: Adds section (f) which explains the exemption remains in effect until 30 days after the health care provider is notified of the decision to revoke the exemption or, if the health care provider appeals the determination, five days after the revocation is kept after appeal. Page 3, line 4 through line 8: Adds section (g) which specifies a decision to revoke or deny an exemption by a utilization review entity must be made by a health care provider licensed in Alaska with the same or similar specialty as the health care provider being considered and must have experience providing the health care service for which the requested exemption applies. Page 3, line 9 through 13: Adds section (h) which specifies a utilization review entity must provide a health care provider who receives an exemption of this section with a notice that includes: (1) a statement that the health care provider qualifies for an exemption from a prior authorization requirement and the duration of the exemption, (2) a list of health care services for which the exemption applies. Page 3, line 14 through line 23: Adds section (i) which specifies utilization review entities may not deny or reduce payment for a health care service exempted from prior authorization, including a health care service ordered by an exempted health care provider that is performed or supervised by another health care provider, unless the health care provider providing the health care service: (1) knowingly misrepresented the health care service in a request for payment with the specific intent to deceive and obtain an unlawful payment from a utilization review entity or, (2) failed to substantially perform the health care service. 1:51:53 PM MS. FONOV continued the sectional analysis. Page 3, line 24 through page 4, line 19: Adds section (j) which defines in this section: (1) "health care service" means: (A) the provision of pharmaceutical products, services, or durable medical equipment or, (B) a health care procedure, treatment, or service provided: (i) in a health care facility licensed in this state or, (ii) by a doctor of medicine, by a doctor of osteopathy, or within the scope of practice of a health care professional who is licensed in this state. (2) "health maintenance organization" has the meaning given in AS 21.86.900 (means a person that undertakes to provide or arrange for basic health care services to enrollees on a prepaid basis). (3) "prior authorization" means the process used by a utilization review entity to determine the medical necessity or medical appropriateness of a covered health care service before the health care service is provided or a requirement that a covered person or health care provider notify a health care insurer or utilization review entity before providing a health care service. (4) "utilization review entity" means an individual or entity that performs prior authorization for: (A) an employer in Alaska with employees covered under a health benefit plan or health insurance policy, (B) a health care insurer, (C) a preferred provider organization, (D) a health maintenance organization or, (E) an individual or entity that provides, offers to provide, or administers hospital, outpatient, medical, prescription drug, or other health care benefits to a person treated by a health care provider licensed in Alaska under a health care policy, plan, or contract. Section 3: Effective date. Provides an immediate effective date. 1:52:12 PM CHAIR BJORKMAN announced invited testimony on SB 219. 1:53:06 PM DR. EZEQUIEL (ZEKE) SILVA, Texas Medical Association, Washington D.C., said he practices medicine in San Antonio Texas and that he was speaking for the Texas Medical Association (TMA) which collaborated with the Alaska State Medical Association for the American Medical Association. He said the State of Texas was the first state to pass a law to address [the requirement by insurance companies for] prior authorization [of medical services] at the state level and for state-regulated [insurance] plans. He said the Texas legislation passed in 2021 in response to the experience of physicians that prior authorization requirements were causing them undue burden, such as two full- time equivalents doing nothing but [pursuing] prior authorization on a weekly basis and the denial of very commonly preformed services, including services that were very much front and center to what the physicians were experiencing. He said the greatest motivation [to pursue legislation] in Texas was physicians reporting of significant patient harm due to prior authorization requirements. He listed those harms: patients abandoning treatment, not receiving treatment in a timely fashion, loss of bodily function and death. He said the impetus was great and TMA is proud of their actions at the state level. DR SILVA said the 2021 [Texas] legislation went into effect later in 2021 and in 2023, TMA attempted to "tune up" regulations around the law. He reported that those had not passed and that improvement could be made. He commended the efforts undertaken with SB 219 for Alaska. 1:55:28 PM CHAIR BJORKMAN asked whether Dr. Silva could identify pieces of SB 219 that could be improved or things that are right and that the bill sponsor could be proud of. 1:55:50 PM DR. SILVA said SB 219 is well-constructed. He opined the 80 percent measure is reasonable and his reading of the bill suggested it would apply to same service, for example, an orthopedic surgeon being approved to provide knee replacements. If the surgeon achieved 80 percent approval for that procedure, it would result in a "gold card", which is an exemption from the prior authorization requirement going forward. DR. SILVA also addressed the requirement to establish medical necessity for a given service and noted that it is very important to discern and document medical necessity through examination and sound diagnosis. DR. SILVA noted that only three percent of physicians in Texas have achieved "gold card" status. He suggested that was because the requirements are so specific. He said the 80 percent is not only per physician, but it is per exact procedure described by Current Procedural Terminology (CPT) code and then per payor and sometimes also per individual payor product. He said the consequence of this degree of specificity is that it is hard for physicians to achieve 80 percent across all those metrics. His recommendation would be not to include in Bill 219 a minimum [number of approvals]. He said this is in the interest of maximizing the protection of patients from the harms of prior authorization. 1:58:17 PM CHAIR BJORKMAN asked whether it would be beneficial to have the 80 percent mark apply to a group or class of procedures rather than one specific service or procedure. 1:59:19 PM DR. SILVA said discussion in Texas centered on situations like hospital admissions which often include multiple patient evaluation and management codes that apply to and describe a patient's situation, treatment and response. He opined that it would be completely logical to have large groups of codes included in the 80 percent benchmark. He said that would maintain the spirit of the legislation which is to make sure that physicians are practicing the best care possible and not further subject to prior authorization, but also acknowledging that patients are different and even though medicine is grounded in science, it is also an art. The decisions between physician and patient may differ based on patients varied circumstances and on the evolution of the practice of medicine. 2:00:47 PM} JEFF DAVIS, Senior Vice President, Radiation Business Solutions, Wenatchee, Washington, said he spent 18 years as the president of Premera Blue Cross Blue Shield of Alaska, part of a long career in health care, the past five years on the provider side. He hoped to bring a balanced perspective to the discussion and said SB 219 is primarily about patient protection. He observed that patients are often overlooked in this debate and patients bear the majority of the cost of unnecessary prior authorization in the form of physical, emotional and financial harm resulting from delays in care. He said there are multiple studies that demonstrate the negative impacts of prior authorization. He said it is not trivial and it is not all about the provider or about the payor, it is about the patient. He said the original goal of prior authorization were good; it was designed to reduce unnecessary care and make sure things that were paid for [by payors/insurance] were needed, but at this time it has grown unchecked and has become a problem rather than a solution. MR. DAVIS said it is important to remember that SB 219 would not eliminate prior authorization, but it seeks to restore balance to a situation that has become very one-sided in favor of the payor. He added that when a provider signs a network contract, which allows them to provide care as an in-network provider, there is a provision that says the provider agrees to comply with the utilization of requirements of the payor and that the payor may, at any time, amend those requirements. He said the provider is often given a period of time in which to object to those amendments, but the bottom line is usually if the provider doesn't accept those amendments, their only real option is to terminate the contract, which has many consequences for the provider and for their patients. He described this as a very one-sided situation with payors adding multiple layers of prior authorization over the years to the point that the payors themselves recognize that it has gone too far and are eliminating scores of procedures that require prior authorization. He also noted that payors themselves have "gold card" requirements and that if a provider meets the requirements, they are recognized for that. He said SB 219 puts this recognition and exemption from prior authorization in place for providers across the spectrum of the health care environment rather than requiring each provider to go through a costly and time-consuming process of trying to achieve gold card status on their own. MR. DAVIS said he does believe SB 219 restores the balance in the payor-provider relationship to a large degree. He said he believed a provider who meets the standard 80 percent of the time is likely to meet it 100 percent of the time. He said there are very few providers that require correction by prior authorization, but the current system applies to everyone. 2:05:41 PM Senator Bishop joined the meeting. MR. DAVIS noted studies that show 96 percent of the time, there will be approval and patients and providers are spending their time waiting and the insurers are spending their time and money to go through a process that yields little benefit for anyone involved. 2:06:18 PM SENATOR GRAY-JACKSON said one of biggest issues from her perspective is patient claims being denied. She asked whether SB 219 could prevent claim denial. She noted the packet says 15 percent of claims are denied and she opined the percentage of denials is higher than that. 2:06:49 PM MR. DAVIS said according to his understanding of SB 219, if a provider has been exempted from prior authorization, it cannot later be denied for lack of prior authorization. He said there are other provisions in a policy, such as the need for demonstrated medical necessity and there could be a time when medical necessity might be found insufficient after the fact, but he did not think SB 219 would impact a situation like that negatively and may in fact help on the other side. 2:07:58 PM CHAIR BJORKMAN asked what the effect of similar legislation in other states has had on the cost of health care. 2:08:23 PM MR. DAVIS said he doesn't have that experience with other states. He reiterated that 96 percent of the time, prior authorization is approved so he opined that an exemption at 80 percent would have an impact on the cost of health care as a direct result; however, he said there are studies that suggest physicians spend 10-15 percent of their time on prior authorization. He said they spend 10-15 percent of their time on something that 96 percent of the time results in approval and, for most providers, likely 100 percent of the time. If all the physicians in Alaska were able to be 10-15 percent more productive; if they were able to eliminate positions in their practices that deal with prior authorization on a full-time basis, he speculated the increase in physician productivity and the decrease in staff could have a stabilizing or a decrease effect on future cost of health care. He noted that payors probably spend as much time, energy and money on prior authorization as [providers] do and if that were eliminated, it would result in some economies on the payor side as well. 2:10:52 PM CHAIR BJORKMAN asked Dr. Silva whether the prior authorization exemption legislation in Texas had reduced health care costs in that state or other states of which he was aware. 2:11:13 PM DR. SILVA said he was not aware of studies with documentation showing a reduction in cost, but he said anecdotally there is support for that to be the case. He said he hears many stories about delays in care leading to increased utilization of care by patients. He told of a young person with abdominal pain for whom the physician could not secure prior authorization for a CT scan for multiple days. By the time a scan was authorized, the patient's appendix had ruptured and the patient required significantly more medical intervention. He noted the increased expense from an economic and monetary perspective and also the experience for the patient and the physician in terms of emotional distress and the inability to practice the best care possible. He said, anecdotally, SB 219 would support physicians to provide timely care and the best care possible would also have economic benefits. He hoped for a study that would prove that and said he would share it when he finds it. 2:13:01 PM JOHN KELLY, MD; Senior Vice President, Radiation Business Solutions, Wasilla, Alaska, said he is currently based out of Wasilla and transitioning back to his home in Fairbanks. He said he would tailor his comments to multiple sclerosis (MS). He said he has followed this disease through his 34-year career. When he started his career, he said the only treatment he could offer MS patients was high-dose intravenous (IV) steroids for flare-ups. He said the first disease-modifying drugs (interferons) came out about 25-30 years ago and those drugs reduced flare-ups by 25-30 percent which was better than nothing. Interferons caused terrible side-effects. Patients would have flu-like symptoms several days after each injection and injections were given about once weekly. He said there have been tremendous advances in treating MS and today there are treatments that are highly specific and extremely effective, orally or by IV. 2:16:03 PM DR. KELLY said there is now a drug which can be given once every six months which allows for near complete control of the disease. He said these new treatments are more expensive than the older treatments, but the dictum of step-therapy has required that treatment begin with older, less effective, poorly tolerated medications and prove that patients failed that by waiting for them to have another flare-up. He noted that flare- ups damage the central nervous system every time and MS progresses by a series of attacks and withdrawals. He said the step therapy approach is required by most insurance companies, which mean starting treatment with less expensive [medication] even though it's known to be less effective, wait for the drug to fail the patient before moving on to more advanced therapies that are doing such a good job at controlling it. 2:17:47 PM DR. KELLY said MS treatment was an example for which SB 219 would help prevent harm to patients. He said providers track the disease clinically and by MRI scan to follow the volume of white matter disease. The clinical outcome is known for these patients as the disease continues to progress. They lose function, the rate of disability goes up, cognitive ability goes down and it is an aggressive disease that requires aggressive treatment. He said MS is no place for the step therapy approach favored by insurance companies. He said he has a high success rate of getting the more advanced drugs approved, but that it is time- consuming to jump through the hoops to get the patient on the best possible drug from the get-go. He said it is a frustrating process. DR. KELLY told about a young, athletic and active patient who wants to remain so, but five weeks after diagnosis, he is still trying to gain approval for her treatment from the insurance company. He said, in the meantime, the patient worries about the possibility of another flare-up and what that might mean for her and her long-term quality of life. He said SB 219 would be beneficial for these patients who are relentlessly and irreversibly harmed by ongoing attacks of the disease while going through the hoops [of prior authorization]. He said it was not defensible to treat a patient that way. DR. KELLY shared the story of another patient, a 17-year-old who he saw after her third episode of optic neuritis. He said each episode causes loss of vision. He diagnosed her with a variant of MS and prescribed a very specific treatment for her condition that is highly effective. He said nothing else works and he faced the same frustration with insurance companies wanting to go through step therapy. He emphasized the patient was 17 years old, progressively going blind and there is no excuse for such a delay. He said after considerable personal preparation and effort, he was able to persuade the insurance company to approve his prescribed treatment. 2:21:56 PM DR. KELLY shared his own story as a Type II diabetic. He said he changed insurance companies, and it has taken several months to resume the medications that have controlled his condition very well for years. In the meantime, he was compelled to try different medications and endure the accompanying negative effects until he could return to the medications that worked for him. DR. KELLY urged that whatever could be done to stop harm to patients is worthwhile. 2:22:36 PM CHAIR BJORKMAN noted the testimony that the current system of prior authorization requirements leads to increased frequency of negative outcomes. He asked whether the current system leads to more utilization and higher costs because when people are eventually approved for care they require more intensive treatment. 2:23:10 PM DR. KELLY concurred. He said it may not seem tangible to the insurance carrier because the current system leads to things like long-term disability or [reducing] the longevity of a patient's work life or their ability to remain independent and walking and able to engage in activities of daily living. He said those things aren't costs felt by the insurance company as much as by the patient. He noted the cost of urinary incontinence may be for "Depends" and urologist visits from the insurance company's perspective, but they don't experience what the patient is experiencing. DR. KELLY said, regarding treating MS, every patient has the right to the most effective, best tolerated treatment from the get-go; not jumping through hoops with therapies that are known to be less effective and waiting for proof they don't work. 2:24:31 PM CHAIR BJORKMAN opened public testimony on SB 219. 2:24:55 PM GARY STRANNIGAN, Vice President of Congressional and Legislative Affairs, Premera Blue Cross Blue Shield, Everett, Washington said Premera Blue Cross Blue Shield had considerable concern with SB 219. He said Premera and other insurance carriers use prior authorization to try to put downward pressure on waste, fraud and abuse, which the American Medical Association (AMA) pegs at about 25 percent. He said it is worth noting that Premera is currently fighting, in concert with the Alaska Department of Insurance and the Federal Bureau of Investigation (FBI), fraud for claims valued at about $120 million. He said SB 219 will limit the effectiveness of the prior authorization tool to apply that downward pressure. MR. STRANNIGAN opined SB 219 will be difficult to comply with from an operational program perspective. He said a program would have to be built to track the data, assure accuracy and make decisions based on the data. He suggested the result may be a situation that doesn't make sense because SB 219 only applies to the fully insured market in the State of Alaska. He said it would not apply to the state employee plan. He said it would if this was good policy and the state was willing to pay for it. He said SB 219 does not apply to self-funded insurance plans, either. MR. STRANNIGAN suggested the following consequence of SB 219. The bill may lead to Premera giving up on prior authorizations. The contracts [with providers] stipulate the insurance pays for medically necessary care. If, retrospectively, a service was determined [by the insurance company] not to be in the best interest of a patient, the insurance will not pay for it. He said it will only take one of two of these incidents for doctors to get the word out and develop a plan to call the insurance company beforehand, which leads right back to the same crummy system with all kinds of friction, which he acknowledged is real and that he is aware of it. 2:27:38 PM MR. STRANNIGAN suggested focusing on the friction and trying to minimize it. He said an 80 percent threshold essentially eliminates prior authorization. He suggested instead that turn- around times, as they exist in law, be tightened from five days for standard turnaround and one day for urgent, to three days for standard and remain at one day for urgent. He further suggested requests for prior authorization be submitted using an electronic portal rather than fax, which, necessitates a manual process. He said faxing is what leads to the friction. He urged streamlining the process to make it work better, not throwing it out. 2:29:00 PM SENATOR GRAY-JACKSON asked what percentage of claims are denied. 2:29:16 PM MR. STRANNIGAN said the percentage is low, but he does not know the number exactly. He offered to get back to the committee with the answer. 2:29:36 PM SENATOR GRAY-JACKSON asked what percentage of claims that were denied were reversed after appeal. She acknowledged that he likely could not answer in the meeting and asked for answers to both questions. 2:30:01 PM SENATOR MERRICK asked whether an increase from 80 percent to 90 percent in SB 219 would change his opinion of the bill. 2:30:10 PM MR. STRANNIGAN said he did not think it would. He said new programming would still be necessary. He noted that in Texas, there is a huge insurance marketplace compared with Alaska's very small insurance marketplace to spread the investment across. He said the difference between 80 percent and 90 precent would not change the need to build that program, whether they were serving Alaskans or Texans. He said it would be difficult to pencil out. 2:31:15 PM CHAIR BJORKMAN asked Deputy Director Carpenter whether the Division of Insurance has any concerns with SB 219. 2:31:44 PM HEATHER CARPENTER, Deputy Director, Division of Insurance, Department of Commerce, Community and Economic Development, Juneau, Alaska said the Division is neutral on SB 219. She said the division would ask the committee to consider changing from an immediate effective date to a specific effective date that would allow the division time to write regulations. 2:32:16 PM CHAIR BJORKMAN suggested that SB 219 be amended to include state insurance plans and asked whether that would influence the Division's position on the bill. 2:32:28 PM MS. CARPENTER said, if SB 219 were to extend beyond insured plans it would be necessary to consult with the Department of Law as well as those who represent Alaska Care. She noted conversations on another bill in the Senate Committee on Labor & Commerce noting those plans are not overseen by the Division of Insurance. She said they follow Employee Retirement Income Security Act (ERIS) laws and lots of other things. She said the insured market is what is regulated by the Division of Insurance, which includes the individual market, small group and large group plans, which comprises about 15% of the health care market in Alaska. 2:33:22 PM CHAIR BJORKMAN asked Mr. Kosin how SB 219 would affect Alaska hospitals and their mission to provide care. 2:33:45 PM JARED KOSIN, President and CEO, Alaska Hospital and Healthcare Association, Anchorage, Alaska, appreciated previous testimony and the articulation of the issue. He noted that a hospital will treat anyone, regardless of their ability to pay. He said SB 219 is all about putting doctors and patients together and removing unnecessary barriers or hurdles when care is needed. MR. KOSIN said SB 219 is crafted to take the best of the best providers who have gone through the prior authorization process and achieved a threshold of 80 or 90 percent and determining that they no longer be required to engage the process. He said that would then eliminate the delay for patients who have been told they need a certain procedure and then must wait until the provider and their team can work with the insurance company to determine whether that service will be authorized. MR. KOSIN said SB 219 would remove all the unnecessary steps for these very specific instances. He said care would be more available and in the hands of the providers and the patients. He said that would be very consistent with the hospitals mission. He said SB 219 is reasonable and it keeps the process in place and provides a reasonable avenue for using it going forward. 2:36:29 PM CHAIR BJORKMAN held SB 219 in committee. 2:36:35 PM At ease 2:40:27 PM CHAIR BJORKMAN reconvened the meeting and closed public testimony on SB 219.