HB 123-DISCLOSURE OF HEALTH CARE COSTS  3:10:52 PM CHAIR SPOHNHOLZ announced that the first order of business would be HOUSE BILL NO. 123, "An Act relating to disclosure of health care services and price information; and providing for an effective date." 3:11:50 PM CHAIR SPOHNHOLZ, as the sponsor of proposed HB 123, declared that "knowledge is power." She stated that health care was the only industry in which the consumers did not know the price prior to the purchase or utilization of services. She noted that this was the removal of "one of the fundamental tenets of capitalism, that is the power of the consumer to make choices about what they do or they don't purchase." She offered an example for a colleague who had sustained an injury and the subsequent expensive testing and recommended treatment. She shared that, after the testing, the colleague had questioned the need for the test, as the test had not altered the course of treatment. She shared that proposed HB 123 provided consumer pricing transparency which was simple and clean to implement, without adding any additional cost to the state. 3:14:32 PM BERNICE NISBETT, Staff, Representative Ivy Spohnholz, Alaska State Legislature, stated that the intent of the bill sponsor, Representative Spohnholz, was to create a foundation to increase price transparency in health care in Alaska. She said that transparency and access to health care costs would empower consumers to take more financial responsibility for their health care. She explained that the proposed bill required health care providers and facilities to display the undiscounted prices of their most common health care procedures in a public area, or on their website. She declared that it was the intent of the sponsor to require health care providers to disclose their costs, but not make it burdensome to provide this information. She relayed that this was important, as when consumers had this information, it would give them the power to choose their health care options. It would also open more conversations regarding high health care costs in Alaska and consumer control for the health care market. 3:16:01 PM MS. NISBETT directed attention to the Sectional Analysis [Included in members' packets] and explained that Section 1 was expanded to authorize the Department of Health and Social Services (DHSS) to collect health services and price information. She stated that Section 2 was "really the meat of the bill," it was a new section which said that health care providers and facilities would compile a list of the most common procedures along with the undiscounted price. This list would be compiled once each year, and be posted in a public area or on the provider's website, as well as provided to DHSS for posting on the departmental website. She added that failure to provide these costs could result in a fine, which shall not exceed $2500. She reported that the effective date for the proposed bill would be January 1, 2018. 3:17:50 PM REPRESENTATIVE SULLIVAN-LEONARD asked for an explanation to the zero fiscal note, as there would be increased labor costs for maintenance of the DHSS data base and the levying of any fines for failure to comply. MS. NISBETT replied that the zero fiscal note was from DHSS. CHAIR SPOHNHOLZ explained that the proposed bill did not require a data base, as the information would merely be uploaded to the department's website. She added that DHS had stated that this could be absorbed into the regular work load. REPRESENTATIVE JOHNSTON asked if there was a subjective nature to the 25 procedures required to be listed. CHAIR SPOHNHOLZ replied that the decision to require listing of 25 procedures for individual practitioners and 50 procedures for hospitals was to keep the requirement from becoming too onerous. She opined that this was a practical number for the most frequently offered services, although this number was flexible. REPRESENTATIVE JOHNSTON asked if each facility would decide which of these procedures were the most frequent. REPRESENTATIVE SULLIVAN-LEONARD asked for further testimony regarding the fiscal note from DHSS. 3:20:49 PM JILL LEWIS, Deputy Director - Juneau, Central Office, Division of Public Health, Department of Health and Social Services, explained that the determination for implementation was simple, that DHSS would accept PDF versions of the cost lists and these would be posted as-is to the website, most likely alphabetically. She declared that DHSS did not anticipate much enforcement, as they expected a good participation rate. 3:22:13 PM REPRESENTATIVE SADDLER questioned whether the state should be involved in these private transactions. He asked what information was to be disclosed, stored, and promulgated. He asked if the listing would reflect the price for someone "walking the streets." MS. NISBETT replied that the definition for price in the proposed bill would be for the undiscounted price, before any negotiations. She called this "the charged master price" that each facility and provider set for themselves. REPRESENTATIVE SPOHNHOLZ, in response to Representative Saddler, pointed out that government should enter into this to protect consumers, as the market itself had not done this. 3:23:56 PM REPRESENTATIVE CLAMAN asked why it was only the undiscounted price, and not the other prices which were published. MS. NISBETT replied that this was an attempt to keep the bill as simple as possible, and that this price could be used as a reference point. REPRESENTATIVE CLAMAN asked if there were any limits, such as confidentiality with insurance companies, which would prohibit the disclosure of prices. MS. NISBETT said that, although it would be in the best interest to include the insurance costs, the bill would focus on the undiscounted price to allow consumers to make a decision. REPRESENTATIVE SADDLER asked how the pricing currently worked. MS. NISBETT replied that the intent of the sponsor was for the consumer to have this price information prior to entering a clinic to receive services. REPRESENTATIVE SADDLER acknowledged that most consumers would like to have the cost information, although he questioned whether there was other information which made it difficult to attain a fair price. REPRESENTATIVE SPOHNHOLZ acknowledged that there was a challenge for health care pricing as there was not a clear agreement for what was a fair price. As there was a wide range for what was actually paid, she had opted for simplicity and asked for the undiscounted price as there were so many different variations. She stated that there needed to be a pricing starting point. She relayed that the proposed bill stated that the information would be posted in a public place in the doctor's office, as well as on the website, and on the Department of Health and Social Services' website. She stated that there was not one price that everyone paid, and although an all payers price list had been suggested, it had been ruled untenable due to the cost. REPRESENTATIVE SULLIVAN-LEONARD asked if, as the prices were to be posted, this would open the door for patients to ask for discounts on particular procedures. MS. NISBETT said "yes." 3:30:59 PM BECKY HULTBERG, President/CEO, Alaska State Hospital and Nursing Home Association, stated that this was an important issue, and that it had been raised frequently in the past few months. She expressed appreciation for the simplicity of the proposed bill and its goal for avoiding additional administrative costs. She stated support for the concept of price transparency and consumer engagement in health care decision making. She relayed that the structure of the health care payment and delivery system was complicated, which made price transparency difficult to implement, even when all the parties agreed on the desirability. She declared that it was important to have realistic expectations for the accomplishments from price transparency. She pointed out that economic theory and reality supported the idea that most consumers were only price sensitive and engaged in price shopping up to the point of out-of-pocket exposure. She declared that low deductibles and low out-of- pocket maximums meant that most customers would not be concerned with price transparency. She reported that most public health care plans in Alaska were maintaining relatively low deductibles and out-of-pocket maximums, while private sector plans were moving toward higher deductibles. She pointed out that it was often the insurer with access to the best data. She suggested that successful transparency initiatives sometimes also included an insurance component, which she encouraged as an addition to the proposed legislation. She reported that some of the larger insurers in Alaska already offered price transparency tools. She stated that undiscounted prices were a reference point, as most consumers were not paying this price. She reported that insurers paid rates based on contractually negotiated discounts, and self-pay and charity care discounts were also often offered to patients without health insurance. She recommended to delete the words "charged to an individual recipient" from the language of the proposed bill. She noted that the proposed bill required that the list be compiled by procedure and diagnostic code. She explained that diagnostic codes were very specific, there could be many different codes for a procedure, and she suggested to instead just use the procedure code which she opined should accomplish the objective. She suggested that, as DHSS was required to post the pricing information on its centralized website, it would be duplicative for individual providers to also post this information, and she recommended removal of this requirement for providers. She asked that the sponsor consider a change of the requirement for posting the price list, to just make the list available. She offered her belief that this could stimulate conversation for the consumer cost. She stated that health care price transparency was a very complex topic, and she expressed her appreciation for the discussion. 3:36:05 PM REPRESENTATIVE TARR asked whether there were efforts in any other states and if these suggestions were in line with those. MS. HULTBERG replied that states had different frameworks. She added that the all payer claims data base was the gold standard, albeit the most expensive option. She allowed that some states had chosen an approach similar to the proposed bill, whereas some states had mandated that providers offer individualized estimates. She declared that this proposed bill was a foundation and a step to elevate the attention and improve the provision for pricing information. MS. HULTBERG, in response to Representative Tarr, said that generating a conversation between [the patient] and the provider was optimal. She mused that having the price list available, but not posted, would generate a conversation. She acknowledged that there was not a perfect solution to this "Gordian knot of a problem." REPRESENTATIVE SADDLER asked about the current transparency for health care costs in Alaska. MS. HULTBERG said that this depended on the provider. She stated that hospital prices were very difficult to understand, as there were layers of discounts, deductibles, and out-of- pocket costs. She reported that the hospitals were insuring that staff were available to help navigate the system and find out the prices. She acknowledged that, although it was possible to find the price, it was also difficult. She offered her belief that the challenge was to make it less difficult given the structure of the system. REPRESENTATIVE SADDLER asked if price transparency was beneficial or detrimental to the hospitals and nursing homes. MS. HULTBERG expressed agreement that price transparency was optimal, more information was better for the system and for the consumer. She questioned how to do this, given how the health system had evolved for the past 40 years, without adding cost and still helping the consumer. She stated that there was not a philosophical difference regarding the good of transparency, but the difficulty was in how to do it. REPRESENTATIVE CLAMAN asked if the discounted insurance rates were published in all states, and if it was possible for these proprietary rates to also be published. MS. HULTBERG said she would have to ask about this feasibility. She shared that many insurers and large employers had tools to help find the prices and find the most cost effective option in each area. She agreed that, as not everyone offered these tools, there was some value in posting prices as a reference point for those patients without insurance. REPRESENTATIVE EASTMAN expressed his agreement with the philosophy, and asked whether the proposed bill captured a good process for transition or could be improved. MS. HULTBERG offered her belief that "the beauty in this bill is the simplicity. I do not think this would be a difficult bill for us to administer." She stated that she did not have concerns, at this point, for the transition. REPRESENTATIVE SADDLER mentioned capital and operating expenses as elements of pricing, and asked what other elements of health care services could affect any change in pricing if the proposed bill was passed. MS. HULTBERG suggested that a PhD in health care economics was helpful in pricing. She stated that it was too early to tell about the price transparency initiatives and whether they would lower costs. REPRESENTATIVE JOHNSTON asked about a national site for health care costs, and the possible use of its data. MS. HULTBERG replied that there was a national move toward price transparency. She shared that, as the undiscounted charges were not what most people paid, it was important for the insurer to be able to determine the actual out-of-pocket expense. She emphasized the need for the patient to call the insurer and the provider to verify the procedures, the co-pay, the out-of-pocket costs, and whether the provider was in-network. 3:46:33 PM JOHN ZASADA, Policy Integration Director, Alaska Primary Care Association (APCA), explained that APCA was the association of community health centers in Alaska and was required, by law, to accept patients regardless of ability to pay. He explained that there was a sliding scale discount based on income. He declared support for increased price transparency and added that patients were engaged and educated on the ways to use the care options and coverage available. He reported that Alaska health centers mostly provided patients with an estimate of charges for particular procedures, upon request, and that a large number of the health centers had expressed an ability to compile and post a list of prices for the most common procedures, as outlined in the proposed bill. He expressed concern for effective explanation regarding the discounts on the sliding scale, so patients understood what they had to pay. He said that federally qualified health centers had a unique bundled payment system, and that the rack rate was often higher than what would be posted with a private primary care provider. He shared the concern by health centers that the requirement to post prices on the health center websites may have an unintended consequence to serve as a barrier for coming to seek care, especially for low and moderate income patients and people for whom English was a second language, as the sliding scale discount was often presented at the time of appointment. He suggested that posting the price list at the facility, along with support to better understand the actual cost to the individual, might be more effective for ensuring maximum access to care. 3:49:53 PM REPRESENTATIVE CLAMAN asked about making available the listings for the negotiated prices. MR. ZASADA explained that 80 percent of the patients at community health centers in Alaska were at 80 percent of poverty or below, and that about 33 percent had commercial insurance, with another 33 percent being uninsured. He stated that the sliding scale discount was the primary way to reduce the cost from the main rack rate. He stated that eligibility staff at the health centers worked with the patients to provide the price, so that patients knew the cost. REPRESENTATIVE SADDLER asked if the transparency of prices would affect the services of community health centers in Alaska. MR. ZASADA noted that sharing rack rates on a website could serve as a barrier to care for those people without health insurance literacy. He expressed concern for potential patients not seeking primary and preventative care based on a rack rate. Other than this, he offered his belief that the proposed bill would not dramatically affect the care offered. REPRESENTATIVE SADDLER asked for a definition of rack rate. MR. ZASADA said that the bundled rate from a community health center included the presentation of the issue by the patient, the examination, the procedure, the care coordination and other factors which were built in by the health center. REPRESENTATIVE EASTMAN asked if this legislation would allow disclaimers for price discounts. MR. ZASADA offered his belief that many health centers would prefer personal interaction with a patient for those discussions, as understanding for a sliding scale discount system was not easily understood via a website. He declared that it was much easier and clearer in person, especially for those with limited health insurance literacy. REPRESENTATIVE EASTMAN asked if the legislation would allow this. MR. ZASADA stated that the APCA would prefer not to post the prices on the website. REPRESENTATIVE SPOHNHOLZ asked if anyone paid the rack rate. MR. ZASADA said that there were some uninsured patients with incomes over 200 percent [of the poverty rate] who were subject to the full price. He shared that there were also discounts for early payment. He acknowledged that some people were subject to the full price. MS. HULTBERG, in response to the aforementioned question from Representative Spohnholz, said that she would follow up with this information. REPRESENTATIVE SPOHNHOLZ asked why some people would not pay the full price. MS. HULTBERG replied that Alaska State Hospital and Nursing Home Association also used sliding scales and self-pay discounts. 3:56:53 PM REPRESENTATIVE SPOHNHOLZ said that HB 123 would be held over.