HB 176-DIRECT HEALTH AGREEMENT: NOT INSURANCE  3:28:05 PM CO-CHAIR SPOHNHOLZ announced that the next order of business would be HOUSE BILL NO. 176, "An Act relating to insurance; relating to direct health care agreements; and relating to unfair trade practices." 3:28:38 PM The committee took a brief at-ease. 3:28:52 PM REPRESENTATIVE SNYDER moved that the committee adopt the proposed committee substitute (CS) for HB 176, version 32- LS0784\B, Marx, 4/7/22 ("Version B"), as the working document. 3:29:12 PM REPRESENTATIVE SNYDER objected for the purpose of discussion. 3:29:23 PM CO-CHAIR SPOHNHOLZ noted that the proposed CS is substantive and the intention in adopting Version B is to get a new version on the record for the committee to review in depth. She explained that Version B includes consumer protections as recommended by Ms. Lori Wing-Heier, Director, Division of Insurance, Alaska Department of Commerce, Community, and Economic Development (DCCED), during a previous hearing on the bill. 3:30:13 PM CHELSEA WARD-WALLER, Staff, Representative Ivy Spohnholz, Alaska State Legislature, reviewed the changes made in the proposed CS for HB 176, Version B. She spoke from a document in the committee packet, titled "Summary of Changes, CSHB 176(L&C) Version A to Version B," which read: Section 1  Page 1, [line 7]; Removes "or the representative of the patient" and makes conforming changes throughout the bill. Page 1, line [8]; Replaces "periodic" with "annual" and makes conforming changes throughout the subsection. Page 1, [lines 9-11; Adds new subsection (b), reordering language from version A]. Page 1, [lines 11-14]; Inserts new language requiring that annual fees must be comparable for comparable services and may not be based solely on the patient's health status or sex. Page 2, [lines 5-6]; Adds a new subsection (c) and reorders following subsections accordingly. [Adds language to clarify what entities are involved in direct health care agreements.] Page 2, lines [14-23];  Removes language in subsection (4) and replaces it with additional requirements for the direct health care agreement as follows: (4) it must be printed in a font not smaller than 12 points and written using plain language that an individual with no medical training can understand; (5) it must identify and include contact information for the person responsible for receiving and addressing a complaint made by a patient; and (6) it must state that the annual fee under the agreement for services must be comparable to other patients under the provider's other direct health care agreements and may not be based solely on the patient's health status or sex. Page 2, [lines 24-30];  Inserts a new subsection (d), which allows a patient to terminate a health care agreement in writing within 30 days of entering the agreement. This subsection also provides that if a patient terminates an agreement, the provider must refund to the patient payments made less payments made for services already performed within 30 days. A nominal termination fee may be charged. Page 2, [line 31 page 3, line 13];  Adds language [in subsection (e)] and a new subsection (f) to state that a direct health care agreement may be terminated in writing after at least 30 days' notice or in accordance with the agreement. An agreement must provide for a refund and may provide for a nominal termination penalty or nominal termination fee. Additionally, a new subsection (g) is added, which allows the parties to a direct health care agreement to modify or renew the agreement by written agreement of the parties. A health care provider may not change the annual fee under the agreement more than once a year and shall provide at least 45 days' written notice of a change in the annual fee. Page 3, lines [14-16]; Reverses language in version A to make direct health care agreements subject to AS 21.07 (Patient Protections Under Health Care Insurance Policies) and AS 21.36 (Trade Practices and Frauds). Page 3, line [28 page 4, line 20];  Inserts new subsection (j), that a person may not make, publish, or disseminate an assertion, representation, or statement with respect to the business of direct health care agreements, or with respect to a person in the conduct of the person's direct health care agreement business, if that is untrue, deceptive, or misleading, and may not[:] (1) misrepresent the benefits, advantages, conditions, sponsorship, source, or terms of a direct health care agreement; (2) use a name or title of a direct health care agreement misrepresenting its true nature; or (3) make a false or misleading statement as to a direct health care agreement. Additionally, inserts a new subsection (k), which requires that health care providers entering into health agreements file a report with the division of insurance no later than [September] 1 that includes (1) the number of health care providers in the health care practice; (2) the number of direct health care patients the health care practice has the capacity to serve; (3) the number of government entities, patients, and employers of patients that entered or maintained a direct health care agreement with the health care practice in the preceding calendar year and the annual fee paid by each government entity, patient, and employer of a patient, as applicable, under the direct health care agreement; and (4) other information requested by the division. Page [4, lines 22-23]; Inserts a new subsection (1) defining a "health care practice" as "a firm, corporation, association, institution, or other person licensed or otherwise authorized in this state to provide health care services;" and renumbers subsections accordingly. Page [5, lines 20-22]; Inserts a new subsection (c), which allows health care providers to decline entering into a direct care agreement with a new patient if the health care provider does not have the capacity to accept new patients. Page [5, line 26]; References the definition for "health care provider" in AS 21.03.025(l). Page [5, line 28]; Inserts a new subsection (58), to add violating AS 21.03.025 (direct health care agreements) under the unlawful acts and practices statute of Article 3, Unfair Trade Practices and Consumer Protection, and renumbers the following subsection accordingly. 3:34:59 PM CO-CHAIR SPOHNHOLZ noted that the page numbers and line numbers in the Summary of Changes are incorrect, but the content is correct. She stated that a [corrected] summary of changes would subsequently be provided to members. 3:35:40 PM REPRESENTATIVE SNYDER removed her objection to adopting the proposed CS, Version B, as the working document. 3:35:50 PM REPRESENTATIVE MCCARTY objected. He asked when members would be receiving the corrected summary of changes. CO-CHAIR SPOHNHOLZ replied that members would receive the corrected summary of changes by 10:00 a.m. [on 4/12/22]. She reiterated that the content presented was correct, but the line numbers and page numbers were off. She explained that adopting the proposed CS will allow for getting Version B of HB 176 on the public record so the committee can then start drafting amendments to Version B. REPRESENTATIVE MCCARTY removed his objection to adopting Version B as the working document. 3:37:30 PM CO-CHAIR SPOHNHOLZ announced that there being no further objection, the proposed CS for HB 176, Version B, was adopted as the working document. 3:38:09 PM REPRESENTATIVE KAUFMAN stated that a concern he had with the original version of the bill [on page 3, Section 2(b), lines 20- 26] was the intractability for the health care provider to shift somebody to another provider or to cease. 3:39:01 PM LORI WING-HEIER, Director, Division of Insurance, Alaska Department of Commerce, Community, and Economic Development (DCCED), responded that she's not sure whether that continuity of care provision is included in Version B, which includes many consumer protections. CO-CHAIR SPOHNHOLZ interjected that the continuity of care provision referenced by Representative Kaufman is included in Version B, Sec. 2(b), on page 5, lines 10-16. 3:39:37 PM REPRESENTATIVE SNYDER stated she wants to keep close attention on the issue of primary care providers. She offered her appreciation for decreasing the patient panel size which increases the amount of time a provider can spend with an individual patient, but expressed her concern that reducing the provider's patient panel effectively means fewer primary care providers per the population. She related that, according to what she is reading, the patient panels with direct primary care agreements are between one-half and one-third. MS. WING-HEIER answered that before the committee's next meeting she will pull the number of primary care facilities for providers in Alaska. Regarding patient panels, she surmised Representative Snyder is asking how many patients a doctor would take under a direct primary care agreement. She said it would be subject to what the doctor wanted, but she believes that, in testimony, it was stated that the number is somewhere around 600. REPRESENTATIVE SNYDER recalled that according to what she is reading the typical target panel size is between 400 and 1,000. She asked what the current panel size is under the present model of care so it can be used for comparison moving forward. MS. WING-HEIER replied that she would get back with an answer. 3:41:52 PM REPRESENTATIVE MCCARTY recalled testimony [on 3/23/22, provided by Dr. Lee Gross of Epiphany Health Direct Primary Care, North Port, Florida], in which [Dr. Gross] stated that this is the only model his clinic does and any patients needing more intense treatment are referred outside his practice. He expressed his concern that Alaska does not have as many physicians as do Florida and other states. He asked whether Ms. Wing-Heier would have any concerns if providers were to do direct primary care agreements as well as being a preferred provider organization (PPO) with insurance companies under which the provider uses a CPT code for charges, but the provider is doing the exact same services under the direct agreement. MS. WING-HEIER requested clarification on whether Representative McCarty is asking if the provider is basically double billing because the provider would get the fee under the contract as well as billing the insurance company. REPRESENTATIVE MCCARTY clarified maybe not double dipping but maybe choosing which is going to pay them the most. MS. WING-HEIER responded that the doctor or provider will be able to determine what services are going to be offered in the [direct primary care agreement] contract. She posed a scenario in which the provider charges $100 per month under the agreement and someone wants an MRI or other test that is going to cost more than the annual fee. Such tests, she said, should be outside the direct care agreement because otherwise the facility would go underwater. That will be watched by the division, she continued, and providers will be given the benefit of a doubt that they know how to price for the flus, sore throats, and annual exams that will be covered in these agreements, and that anything of real extensive cost or that takes a specialist will be referred out and/or the insurance company charged. CO-CHAIR SPOHNHOLZ added that from a consumer protection standpoint the committee must ensure that there is not a situation where folks are gaming the system. She suggested that the committee may therefore need to explore this area further to ensure that consumers don't get hurt along the way. 3:45:21 PM REPRESENTATIVE MCCARTY stated he can see clients getting services while providers spend money on billing trying to get paid and perhaps must write off a tremendous amount because they can't go after the patient. Through this [proposed] format, he continued, providers would get paid lots of money upfront and would be responsible for following the contract's format. He said he is concerned about physicians who make money through referrals to a lab they own or a procedure they do and that they may make unnecessary referrals as a "bait and switch operation." MS. WING-HEIER replied that those are the things any state would have to watch for. However, she noted, attendees at today's Lunch and Learn by Senator Wilson will hear providers talk about how hard it is to recruit and retain physicians and staff overall. Yet [during the bill's previous hearing], speakers said that doctors or providers prefer these types of agreements because they don't become so burned out and they are not trying to chase making money off referrals to labs or other additional tests. Part of [the division's] issue with the cost for health care under the fee-for-service is that the more [a physician] sends [a patient] out, the more the physician can make. It is an antiquated model without a doubt, she said, and this is a new model that has not been tried in Alaska, but it has some merit. REPRESENTATIVE MCCARTY stated he is not labeling health care people as scoundrels, but he wants to make sure there are provisions in the bill which will make it easy to spot scoundrels if they do show up. MS. WING-HEIER expressed her agreement and advised that this is going to be trial and error. She said the committee has put in for an annual report to come back to the division and perhaps there will be facts or data that can be tracked to see if there is a concern with the way these are being utilized. CO-CHAIR SPOHNHOLZ added that the annual report was put in by the committee partly to be able to get some recommendations and prompt feedback from the division. She said it will provide clarity on what is happening, whether retooling is needed to protect Alaskans, and that health care "spend" is not actually growing rather than improving the experience of folks on both ends of the health care relationship. 3:49:37 PM CO-CHAIR FIELDS stated he wants to ensure that people do not migrate from a health insurance plan to a direct primary care plan because it is cheaper. He asked whether this has happened in states that have legalized or encouraged direct primary care. MS. WING-HEIER responded that she has neither heard nor read anything about that. But, she advised, [the division] will watch for that during the first few years as these roll out after the bill's enactment. CO-CHAIR FIELDS clarified that he supports greater primary care access but wants to ensure [the bill] would not unintentionally encourage a migration away from health insurance. 3:51:08 PM REPRESENTATIVE KAUFMAN drew attention to page 5, lines 10-18, and asked whether there might be other language that wouldn't be so prohibitive from someone entering into the agreement as this is presently phrased. 3:51:52 PM HEATHER CARPENTER, Health Care Policy Advisor, Department of Health and Social Services (DHSS), answered that she would look at this. She noted that when it comes to Medicaid in this bill it is a little bit more complicated. The stance of the department, she advised, is that it would be cleaner if Medicaid was exempted from direct health care agreements because of concern over audit trails as well as Medicaid is a care of last resort and DHSS must track down any third-party liability before Medicaid can be a payer. In terms of looking at agreements it gets really complicated fast when there are direct health care agreements and consideration for a Medicaid population. REPRESENTATIVE KAUFMAN said he would like to have a conversation off-line about this. He said his concern is that the committee comes up with something that works, and that nothing is built into it that is an impediment on either side of the arrangement. 3:53:09 PM CO-CHAIR SPOHNHOLZ announced that HB 176 was held over.