HB 123-DISCLOSURE OF HEALTH CARE COSTS  3:46:26 PM CHAIR SPOHNHOLZ announced that the next 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." 3:46:48 PM REPRESENTATIVE EDGMON moved to adopt the proposed committee substitute (CS) for HB 123, labeled 30-LS0380\T, Glover, 3/9/17, as the working draft. CHAIR SPOHNHOLZ objected for discussion. BERNICE NISBETT, Staff, Representative Ivy Spohnholz, Alaska State Legislature, paraphrased the changes in the proposed committee substitute [Included in members' packets], which read: Section 2, subsections (a) and (b) states that health care facilities and providers will compile a list by procedure code. We've also changed "including a brief and easily understandable description," to "in plain language that an individual with no medical training can understand." Line 23 we added "and" after "performed;" Subsection (d) states that the health care provider or facility may add a disclaimer explaining that what the consumer pays may be higher or lower than the amount listed. Subsection (g) states that if the individual is fined and wants to appeal, the individual is entitled to a hearing conducted by the office of administrative hearings. In Subsection (h), the definition of health care facility does not include federal health a facility operated by an Alaska tribal health organization or a hospital operated by the United States Department of Veterans Affairs or the United States Department of Defense, or any other federally operated hospital or facility. Subsection (h), number (7) undiscounted price is defined. 3:49:22 PM CHAIR SPOHNHOLZ opened public testimony. 3:49:43 PM JENNIFER MEYHOFF, Senior Vice President, Marsh and McLennan Agency, stated that the agency was a global consulting firm. She added that she was the Legislative Chair for the Alaska Association of Health Underwriters, and that she had 25 years of employee benefits consulting experience and she worked with employers statewide for selection of products to the employee benefit packages. She offered a comparison for the purchase of health care to the determinations for buying coffee or gas or an airline ticket, and declared that a consumer can make a reasonable decision. She declared her support for the proposed bill, as it was time to offer this information to patient consumers, in order to allow decisions prior to receiving care. She suggested that this could contain or reduce the cost of health care. 3:53:12 PM CHAIR SPOHNHOLZ removed her objection. There being no further objection, Version T was adopted as the working draft. REPRESENTATIVE JOHNSTON stated that full disclosure offered choice and the knowledge of cost. She asked for the reason for the exemptions to publicly funded organizations named in the proposed bill. MS. MEYHOFF expressed her agreement that the charges at those organizations would not affect her clients, although she offered her belief that it was "a very valid question of the information being available could be useful to the overall market." 3:55:13 PM JOSH BIEGEL shared a saga of the medical costs after an accident in which his wife broke her arm when she fell on the ice. 3:57:29 PM TERRY ALLARD, Senior Benefits Advisor, Wilson Agency, said that she was also a charter member of the Alaska Association of Health Underwriters and a member of the Legislative committee. She urged passage of the proposed bill. She reported that she had been in the insurance and employee benefits field all across Alaska for more than 30 years. She reported that she spent a significant amount of time educating employees about their benefits and how to best use them, which included conversations for being a responsible consumer. She declared that it was difficult for an individual to be a responsible consumer of health care services in Alaska, as it was not always possible to get the information necessary to make an informed decision. She said that it was easier to determine the procedural options than making an informed decision for the cost and the provider. She stated that consumers could make informed decisions about almost everything except medical services. She relayed that the Municipality of Anchorage had recently passed an ordinance requiring transparency from providers within the city. She stated that this needed to be available all over the state. She cited that almost 30 other states had passed transparency bills similar to the proposed bill. She offered her belief that health care needed to evolve and provide information to the consumers in a more relevant and timely way. She stated her support of HB 123. REPRESENTATIVE SULLIVAN-LEONARD asked if her agency had a data base available to the consumer for the cost of various procedures. MS. ALLARD said that her firm was an independent employee benefits advisory company and did not have access to that data. REPRESENTATIVE SULLIVAN-LEONARD asked if the proposed bill would have helped Mr. Biegel with the challenges posed by his insurance company. MS. ALLARD opined that the proposed bill would help in some ways, although the issue for in-network providers and the charges was a separate issue. She said that the proposed bill does get to the heart of the matter, as full understanding of the insurance coverage would have allowed him to seek care from another provider. REPRESENTATIVE SULLIVAN-LEONARD offered her belief that the variables could make it a different price for each patient. MS. ALLARD acknowledged that the price could be different. She offered her understanding that the proposed bill would ask the providers to post the rack rate, and then the responsibility would be for the consumer to speak with the insurance company to understand the charges and how they would be covered. REPRESENTATIVE JOHNSTON shared that this was an opportunity for collusion by the insurance companies when publishing rack rates. MS. ALLARD said that this would put prices on the open market and allow the consumer to shop. She pointed out that there were laws against collusion among medical providers. REPRESENTATIVE JOHNSTON asked if a public clinic should be excluded. MS. ALLARD said that she did not know enough about the proposal for public clinics, although in a setting for health care that was being reimbursed, it would be logical to have that cost information disclosed to the consumer. CHAIR SPOHNHOLZ pointed out that the aforementioned disclaimer information was included in Version T of the proposed bill, so that consumers were not intimidated by pricing. A community health center could mention its sliding fee schedule as well as the providers insurance accepted, and a private office could mention it was a preferred provider for certain organizations. REPRESENTATIVE JOHNSTON asked if there was any use for an additional disclaimer stating that rates were negotiable. CHAIR SPOHNHOLZ acknowledged that it could be written into the disclaimer as the language had intentionally been left fairly broad. REPRESENTATIVE EASTMAN asked if insurance providers usually considered competition pricing. MS. ALLARD said that frequently the insurance providers were aware of other charges, although she did not know how that knowledge was attained. 4:07:23 PM BECKY HULTBERG, President/CEO, Alaska State Hospital and Nursing Home Association, said that ASHNHA supported the concept of price transparency and consumer engagement in health care decision making. She stated that the third party payment to the insurance mechanism made health care decisions much more complicated. She reported that there were many differences between typical commodities and complex health care payment and delivery systems. She stated that, although there was not an easy solution to the problem without dismantling and rebuilding the health care system, the proposed bill was a good first step toward more transparent pricing. She said that providers to the state should aspire to transparent pricing in a way that did not add additional cost to the system. She declared that cost in the form of compliance should not outweigh the benefits, and the proposed bill would not impose significant administrative burdens that would be transferred as higher costs to the consumer. She reported that ASHNHA hospitals provided estimates, and she expressed her desire that consumers would call and ask for price estimates, to either the insurer or the hospital. She stated that the insurers had the best access to the best data, and that insurers should be required to also make transparency tools available to consumers. She declared that health care price transparency was a complex topic. REPRESENTATIVE TARR asked if the insurer was also making the transparency tool available to allow the consumer to determine what they would owe. MS. HULTBERG explained that she was not recommending anything directly related to the proposed bill but simply an additional way for the consumer to gain access to price information. She stated that many insurers and many self-insured employers had price transparency tools. She shared that it was possible to share information on the employee deductible and out of pocket cost. She suggested that the proposed bill focused on patients without insurance who would be paying a rate comparable to the rack rate. She declared that improvement for the provision of price information was a shared responsibility of providers and insurers. 4:12:50 PM GINA BOSNAKIS, Small Business Owner, stated that she had worked in the insurance industry for about 30 years. She reported that she worked daily with employees and families, in addition to her employer clients, to find the best fit for health insurance. She testified in support of the proposed bill. She reported that, although coding issues or incorrect payments could be quickly fixed, the most common reason for patient calls was for procedures performed by a provider deemed as out-of-network. She explained that acceptance of insurance by a provider, and being an in-network and preferred provider were two very different things and resulted in a very different charge to the patient. She said this legislation would give patients the power to better understand what to ask, prior to incurring unexpected expenses. She offered her belief that the proposed bill had the potential to affect the increasing cost of health care in Alaska. 4:16:08 PM T.J. ALINEN, Assistant Vice President, Human Resources, Denali Federal Credit Union, reported that Denali Federal Credit Union was the third largest credit union in the state, and had 325 employees residing in Alaska. He declared that Denali Federal Credit Union supported the proposed bill. He stated that the escalation in cost of health care was one of the greatest challenges faced by many organizations in the state. He said that, in a free market, buyers and sellers engaged in communication in determining pricing for services and goods, yet this did not occur in the health care industry. He emphasized that market transparency and the availability of information would assist all Alaskans for being better health care consumers. 4:19:01 PM KYLE MIRKA, Business Owner, reported that his business employed 50 people and provided an employer sponsored health care plan. He pointed out that, as premiums had risen almost 40 percent, it would have been cheaper to discontinue the plan and simply pay the PPACA fine. However, his business wanted to provide health care benefits to its employees, even though the business "shouldered the remainder of the burden." He pointed out that any additional increases would make it not affordable for an employer sponsored plan. He declared that health care costs in Alaska "are simply out of control." He opined that it was the only industry where the costs for services were unknown before the service was rendered. He shared that a standard answer from health care professionals for the high cost of health care in Alaska was that "it's expensive to practice in the state." He reported that most of his business products could be purchased in Anchorage for the same price as in Seattle, Pocatello, or Portland. He acknowledged that, although there were added freight costs to Alaska, as well as higher labor costs, it was generally agreed that health care costs in Alaska were disproportionately higher than anywhere else in the world. He offered his belief that price transparency was the first step toward solving the health care problems in Alaska. He declared his support for the proposed bill. 4:21:17 PM RHONDA KITTER, Chief Financial Officer, Public Education Health Trust, reported that the Public Education Health Trust was a not for profit health insurance provider for public education employees in Alaska. She relayed that there were 17,000 Alaskans with health insurance through the trust. She added that she was also the Co-Chair of the Alaskans for Sustainable Health Costs, a group of employers working together to address the rising costs of health insurance premiums in Alaska. She pointed out that the question of how much does it cost was so integrated into the act of buying that consumers did not have to ask, as prices were printed, stamped, and posted. She acknowledged that there were some practices, such as car repair and home improvement, which did not usually publish prices, although most professions could not feign a "hard to say" attitude when questioned about costs. She declared support for the proposed bill. She stated that the bill "correctly requires the disclosure of fees at the provider and facility offices, placing the requirement for public disclosure ... in the offices of those organizations." She conceded that, while the proposed bill was not the silver bullet solution for sustainability, it was "one silver BB that is needed to address the rising cost." 4:23:47 PM SHAWN PURVIANCE, Valley Block and Concrete, offered his belief that health care costs had driven health insurance premiums so high that it was difficult for his business to take care of its 40 employees. He opined that the free enterprise system required competition, which could not exist unless people knew the cost of goods, and that the health care needed "to be brought into the fold of the free enterprise system, so the consumer can decide what gets them the best value for the services they require." He declared that he was not a "huge fan of government regulation of any industries," but he felt this was an important first step for something which would happen of its own accord. He offered his belief that the cost of health care was out of proportion in Alaska, although the insurance companies did have some culpability. He offered an analogy for the increased cost of health insurance compared to the cost of concrete during the past 9 years, pointing out that that it was not possible to raise concrete prices to stay in step. He asked why health care was so expensive in Alaska, as it did not cost that much more to do business in Alaska. He noted that his business proudly posted its prices on handouts and on its website. He offered his belief that the proposed bill was an important first step to provide affordable health care in Alaska. He declared his support for the proposed bill. 4:29:22 PM DENISE DANIELLO, Executive Director, Alaska Commission on Aging, Division of Senior and Disabilities Services, Department of Health and Social Services (DHSS), expressed support by the commission for the proposed bill. She offered a brief overview of the commission. She referenced an earlier statewide meeting with seniors discussing the proposed bill, and added that there was an overwhelming positive response for the bill. She shared that a priority strategy was to disclose health care pricing. She acknowledged that this was a first step toward a solution for a very complicated situation. She declared support for HB 123. 4:32:20 PM CHAIR SPOHNHOLZ closed public testimony. REPRESENTATIVE EASTMAN asked if a cost comparison with a competitor had been considered as a means to accomplish price transparency. CHAIR SPOHNHOLZ, as the sponsor of the bill, said that this comparison was usually required of insurance providers, and she acknowledged that this was a potential option. She said that the changes to health care costs and reform of the health care system was a marathon and that the proposed bill was only a few hundred yards into the first mile, although it was a very important first step. She offered her belief that it was very important for consumers to have the necessary information to make an informed decision at the time of service. She opined that this was a simple first movement. REPRESENTATIVE EASTMAN said that he was in support of transparency and that the proposed bill offered modest gains. He opined that this information did not necessarily translate to the transparency he would hope to achieve. He acknowledged that he did not have an answer, but that he was not overoptimistic for success. CHAIR SPOHNHOLZ stated that the feedback was valid, and there were more comprehensive ways to address the issue. She suggested that an all payer claims database could be the gold standard, as it would allow people to look at much more detailed information which incorporated each individual's insurance situation. She added that it would also require a significant fiscal note, which was not feasible in the current financial situation. 4:37:03 PM REPRESENTATIVE EDGMON moved to report CSHB 123, Version 30- LS0380\T, Glover, 3/9/17, out of committee with individual recommendations and the forthcoming fiscal notes. There being no objection, CSHB 123 (HSS) was moved from the House Health and Social Services Standing Committee.