HB 176-DIRECT HEALTH AGREEMENT: NOT INSURANCE  3:32:45 PM CO-CHAIR FIELDS 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." [The proposed committee substitute (CS), Version 32-LS0784\B, Marx, 4/7/22 ("Version B"), was adopted as the working document on 4/11/22.] 3:33:14 PM REPRESENTATIVE SNYDER moved to adopt Amendment 1 to Version B of HB 176, labeled 32-LS0784\B.1, Marx, 4/13/22, which read: Page 2, line 17: Delete the second occurrence of "and" Page 2, line 23, following "sex": Insert "; and (7) specify the number of patients the health care provider has the capacity to serve and the number of patients the health care provider is currently serving" 3:33:17 PM CO-CHAIR FIELDS objected for the purpose of discussion. 3:33:20 PM REPRESENTATIVE SNYDER explained that Amendment 1, for purposes of consumer protection, would require the provider to specify the number of patients that the health care provider has the capacity to serve and the number of patients the health care provider is currently serving. She said this would give an individual considering a health care agreement an understanding of the level of care and amount of attention that might reasonably be expected from the health care provider. 3:34:16 PM CRYSTAL KOENEMAN, Staff, Representative Sara Rasmussen, Alaska State Legislature, on behalf of Representative Rasmussen, prime sponsor of HB 176, related that the prime sponsor has no objection to Amendment 1. 3:34:39 PM CO-CHAIR FIELDS removed his objection to Amendment 1. There being no further objection, Amendment 1 was adopted. 3:34:49 PM REPRESENTATIVE SNYDER moved to adopt Amendment 2 to Version B of HB 176, labeled 32-LS0784\B.3, Marx, 4/13/22, which read: Page 4, line 19: Delete "and" Page 4, following line 19: Insert a new paragraph to read: "(4) the percentage of the patients that entered into or maintained a direct health care agreement with the health care practice in the preceding calendar year who are paying fees and costs under a direct health care agreement through (A) the federal Medicare program; and (B) medical assistance under AS 47.07;" Renumber the following paragraph accordingly. 3:34:52 PM CO-CHAIR FIELDS objected for the purpose of discussion. 3:34:54 PM REPRESENTATIVE SNYDER noted that Version B, the proposed CS, includes a reporting requirement so it can be determined how well this new approach is working and whether any areas need to be improved. She explained that Amendment 2 would add to the short list of information that would be tracked by requiring the percentage of patients who are paying fees under a direct health care agreement through the federal Medicare program or through medical assistance under AS 47.07. She said this would provide a sense of the spectrum of patients who are receiving care under a direct health care agreement. 3:35:50 PM REPRESENTATIVE KAUFMAN inquired about the end purpose of gathering this information. REPRESENTATIVE SNYDER replied that early research is showing a trend that health care providers adopting the direct health care agreement model are reducing the percentage of patients under Medicare or Medicaid that they serve. There isn't a firm understanding nationally on the extent of that trend, she said, so if this is adopted in Alaska, it would help in understanding what happens. REPRESENTATIVE KAUFMAN said it sounds like the intent of the amendment's sponsor is to have a quota system. REPRESENTATIVE SNYDER responded not necessarily, it is for assessing what is happening and whether this is or isn't a good thing for Alaska, or whether other requirements are needed in the future for direct health care agreements. She said she isn't suggesting what the solution might be, but just getting the information to ensure that all Alaskans regardless of financial situation are able to access care consistently. REPRESENTATIVE KAUFMAN reiterated that it sounds like it may be for the purposes of a quota system. REPRESENTATIVE SNYDER answered that someone advocating for a quota system may be able to utilize this data to support that argument, depending on what the data show. It may not support a quota, she continued, and that is not something she has thought beyond this amendment, only that the information would inform the legislature's decisions moving forward. 3:37:58 PM CO-CHAIR SPOHNHOLZ commented that different iterations of this bill have been heard over the years, and an earlier version in a previous legislature did have a required percentage of people on Medicaid. She offered her understanding that Amendment 2 is not a quota system but a transparency element to be able to understand the way that this new approach intersects with other important populations - seniors covered by Medicare and low- income and disabled people on Medicaid. She stated that Alaska has a crisis in access to care, particularly for people on Medicare trying to find providers because the Medicare rates are so low. Information is needed to understand whether this is helping to meet the shortfall in Alaska or creating an unintended consequence that may need to be remedied. REPRESENTATIVE SNYDER confirmed that that's a fair description of the intent with Amendment 2. She said the purpose of HB 176 is to improve access to care and to monitor how that is going to ensure that improvement is happening. If other issues are instead being opened, she continued, then information will be had for informed decisions on how to fix that. 3:40:05 PM CO-CHAIR FIELDS said this is an important amendment to ensure that affordability is being maintained for diverse care groups. MS. KOENEMAN specified that the prime sponsor is still analyzing Amendment 2 and the impacts that it will have, and that there is a level of concern with including those on federal programs. One thought with having a direct primary care system, she explained, is to potentially pull retired doctors or doctors close to retirement because they would not be inundated; a direct primary care system would allow more doctors to keep providing care instead of leaving the workforce. She said the prime sponsor will, as the bill moves forward, continue to analyze whether it is a quota system or just reporting, given they are distinctly different. CO-CHAIR FIELDS invited comment from the Department of Health and Social Services. 3:42:06 PM HEATHER CARPENTER, Health Care Policy Advisor, Office of the Commissioner, Department of Health and Social Services (DHSS), answered that the department's main concern is including Medicaid beneficiaries as individuals who can access direct primary care agreements. She explained that that is in part because there are limitations with Medicaid a provider must be an enrolled Medicaid provider to serve a Medicaid beneficiary. The department is reimbursing in a fee-for-service Medicaid environment so the department doesn't have the same flexibility that managed care might have. Additionally, she said, Medicaid is the payor of last resort, which means DHSS must chase and require any other third party in a third-party liability situation to pay first. So, if Medicaid were allowed to access these direct primary care agreements, there would be lots of difficulty and bureaucracy and increased cost to the Medicaid program. Ms. Carpenter further explained that individuals who are on the Medicaid program have limited co-pays based on the rules of the federal program, making it a very affordable program for those who are enrolled. She offered to talk with Representative Snyder offline to determine language that would address both the representative's and the department's concerns at the same time. 3:44:03 PM CO-CHAIR FIELDS offered his understanding that under HB 176 a Medicaid recipient could pay out of pocket for his or her direct primary care. MS. CARPENTER replied that the department also interprets the bill that way. But, she noted, Medicaid covers a large breadth of services, so DHSS would be concerned about what services might be outside of that scope for which the individual would want a direct primary care [agreement], and he or she would be paying out of pocket for those services. Therefore, she pointed out, the fiscal note includes indeterminate because the department is unsure of the full implications to the Medicaid program. CO-CHAIR SPOHNHOLZ asked whether there is any prohibition within federal Medicaid statute about participating in a direct health care agreement. MS. CARPENTER responded that she has received mixed signals on that, so she will get back to the committee after more research. REPRESENTATIVE SNYDER clarified that Amendment 2 does not make any requirement for Medicare or Medicaid to be eligible for direct care agreements, it would simply be a reporting requirement for monitoring the success of the legislation. 3:45:54 PM CO-CHAIR FIELDS withdrew his objection to Amendment 2. There being no further objection, Amendment 2 was adopted. 3:46:05 PM CO-CHAIR FIELDS moved to adopt Amendment 3 to Version B of HB 176, labeled 32-LS0784\B.4, Marx, 4/13/22, which read: Page 1, line 1: Delete "and" Page 1, line 2, following "practices": Insert "; and providing for an effective date" Page 5, following line 29: Insert new bill sections to read: "* Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to read: TRANSITION: REGULATIONS. The director of the division of insurance may adopt regulations necessary to implement the changes made by this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law implemented by the regulations. * Sec. 5. Section 4 of this Act takes effect immediately under AS 01.10.070(c). * Sec. 6. Except as provided in sec. 5 of this Act, this Act takes effect January 1, 2023." 3:46:06 PM CO-CHAIR SPOHNHOLZ objected for the purpose of explanation. 3:46:08 PM CO-CHAIR FIELDS explained that Amendment 3 was drafted in consultation with the Division of Insurance and would provide clarity that the Division of Insurance may adopt such regulations as are necessary to implement the changes within HB 176. He said the amendment has value because a whole new type of health care is being legalized and it must be ensured that the appropriate department has appropriate regulatory authority. MS. KOENEMAN, on behalf of the prime sponsor, stated that Amendment 3 is important for the division, and the prime sponsor considers the benefit necessary. CO-CHAIR FIELDS invited the Division of Insurance to provide comment. 3:47:30 PM LORI WING-HEIER, Director, Division of Insurance, Alaska Department of Commerce, Community, and Economic Development (DCCED), thanked Co-Chair Fields for talking to the division and sponsoring Amendment 3. She related that as the division reviewed the bill, it was thought that in time the division may need to fine tune it through regulation, such as some of the reporting requirements and transparency at which the committee is looking. 3:47:51 PM CO-CHAIR SPOHNHOLZ removed her objection to Amendment 3. There being no further objection, Amendment 3 was adopted. CO-CHAIR FIELDS stated that this makes more sense than having to legislate fine tuning provisions later. 3:48:23 PM The committee took a brief at-ease. 3:48:36 PM CO-CHAIR FIELDS stated that Amendment 4 would not be offered due to Representative McCarty not being present. 3:48:44 PM REPRESENTATIVE KAUFMAN moved to adopt Amendment 5 to Version B, HB 176, labeled 32-LS0784\B.5, Marx, 4/14/22, which read: Page 5, lines 14 - 19: Delete "Before terminating a direct health care agreement with an existing patient, a health care provider shall ensure that the patient is transferred to a health care provider who (1) is able to provide the level or type of care the patient requires; and (2) agrees to provide to the patient the level or type of care the patient requires." 3:48:46 PM CO-CHAIR FIELDS objected for the purpose of discussion. 3:48:48 PM REPRESENTATIVE KAUFMAN explained that Amendment 5 would delete the language requiring a health care provider to transfer a patient if the provider can no longer serve that patient. He said he fears that providers who are aware of that liability may choose to not engage in the service and therefore Amendment 5 is a well-intentioned amendment to make this a better opportunity. MS. KOENEMAN, on behalf of the prime sponsor, stated that the prime sponsor understands the concern and the burden this may put on providers and will defer to the will of the committee. 3:50:06 PM REPRESENTATIVE SNYDER requested more context as to whether this is typical language seen in other states or something uniquely developed here. MS. KOENEMAN replied that the language was included in the original bill and is to ensure that a person is not "left out to dry by a provider." For example, she related, her own primary care provider ran some tests and discovered that the level of care she needed was outside his scope of practice, so he referred her to another provider to take on that level of care. Had he not made that referral she would have not known what to do and would have had to search for a provider on her own. This language, she continued, is to ease that burden from the patient while understanding that it may throw an additional burden on the provider. She said she doesn't know if a referral instead of a transfer would achieve the same thing or whether it is better to remove the language. 3:52:00 PM REPRESENTATIVE KAUFMAN offered his belief that there are ethical responsibilities to refer and that that is implicit in the oath under which providers operate. He related that that was the case when his own provider retired. It is a well-intentioned clause, he said, but he fears it will inhibit and that the code of ethics under which doctors operate should be relied upon to provide referrals. CO-CHAIR SPOHNHOLZ said she is conflicted because it may take a while for a handoff to occur and therefore a simple referral may not meet the need; a handoff may be needed to meet the Hippocratic oath. She is conflicted, she continued, because of the importance of ensuring ongoing patient management for certain chronic issues; for example, people with diabetes could lose their vision or limbs. REPRESENTATIVE KAUFMAN responded that he understands the concern, but that if attractive legislation is not created then doctors will not sign up for the program. He cautioned that requiring doctors to sign up for placement rather than referral could be a bar that may limit the number of providers willing to engage in the program. 3:55:00 PM REPRESENTATIVE SNYDER asked whether any providers are available online to answer questions. CO-CHAIR FIELDS noted that no providers are online. He asked Ms. Wing-Heier to provide perspective. MS. WING-HEIER responded that the division believes Amendment 5 would help the bill because it has the same concern as Representative Kaufman. The division agrees with referral, she said, but transfer is problematic. There will be providers who can give a referral but cannot guarantee a transfer, she advised, a provider may be full and unable to take a new patient. Or it might create stumbling blocks for providers when someone's condition gets to a point where the provider is not qualified to treat and does not know anybody because it is a condition for which the patient must go out of state. 3:56:23 PM CO-CHAIR SPOHNHOLZ stated that Amendment 5 applies only to people who are already in a current direct care agreement and is about a "warm handoff" to another provider. She offered her understanding that the division believes that requiring a warm handoff could potentially be a barrier to providers entering into direct care agreements and creating more market capacity. MS. WING-HEIER confirmed that that is right. She said the division looked at it as if the first direct care provider is trying to transfer a patient, or handoff a patient, to a second direct care provider and the other one is at capacity and cannot take any additional new patients, then a barrier has been created for that person to transfer on. Referrals are one thing, she continued, but the division thinks that ensuring they are transferred is problematic. 3:57:36 PM CO-CHAIR FIELDS stated he is hesitant to remove his objection to Amendment 5 when language has not been agreed to by the bill sponsor and personally he is supportive of some consumer protection. He asked whether Ms. Koeneman has suggestions for how to have some degree of protection for referrals or transfers without an unnecessary barrier. MS. KOENEMAN responded that she understands the Hippocratic oath and the desire that there be a referral. She suggested that on page 5 of Version B, line 15, the word "transferred" be changed to "referred" to provide some overarching language in the statute that directs providers to refer. She said the prime sponsor would defer to the committee, however. 3:58:58 PM REPRESENTATIVE SNYDER stated she was going to offer two possible alternatives, one being to [change "transferred" to "referred"]. Another alternative, she said, could be removing the language here as a requirement and instead require the [direct care] agreement itself to specify yes or no regarding whether transfer assistance is part of the agreement. 3:59:45 PM REPRESENTATIVE KAUFMAN stated that the issue is still with placing that obligation of placement. He said referral is within the control of the physician, but transfer is not; placing an obligation on someone for something on which they have no control creates an untenable situation. He said he could withdraw Amendment 5 and suggest a conceptual amendment that states "referred" or "directed" rather than "transferred", which would achieve more of a consensus agreement around what is being looking for. 4:00:34 PM CO-CHAIR FIELDS agreed with withdrawal of the amendment. 4:00:37 PM REPRESENTATIVE KAUFMAN withdrew Amendment 5. 4:00:45 PM The committee took a brief at-ease. 4:01:34 PM CO-CHAIR SPOHNHOLZ moved to adopt Conceptual Amendment 1 to Version B of HB 176. 4:01:52 PM CO-CHAIR FIELDS objected for the purpose of discussion. 4:01:53 PM CO-CHAIR SPOHNHOLZ described Conceptual Amendment 1 as follows: Page 5, line 15: Delete "transferred" Replace with "referred" 4:02:13 PM REPRESENTATIVE KAUFMAN agreed with Conceptual Amendment 1. 4:02:20 PM CO-CHAIR FIELDS removed his objection to Conceptual Amendment 1. There being no further objection, Conceptual Amendment 1 was adopted. 4:02:31 PM REPRESENTATIVE KAUFMAN moved to adopt Amendment 6 to Version B of HB 176, labeled 32-LS0784\B.7, Marx, 4/14/22, which read: Page 1, line 8: Delete "an annual" Insert "a periodic" Page 1, line 10: Delete "annual" Insert "periodic" Page 1, line 11: Delete "annual" in both places Insert "periodic" in both places Page 2, line 1: Delete "annual" Insert "periodic" Page 2, line 9: Delete "annual" Insert "periodic" Page 2, line 10: Delete "annual" Insert "periodic" Page 2, line 18: Delete "annual" Insert "periodic" Page 2, line 19: Delete "annual" Insert "periodic" Page 3, line 11: Delete "annual" Insert "periodic" Page 3, line 13: Delete "annual" Insert "periodic" Page 4, line 17: Delete "annual" Insert "periodic" 4:02:36 PM CO-CHAIR FIELDS objected for the purpose of discussion. 4:02:38 PM REPRESENTATIVE KAUFMAN said Amendment 6 would create greater flexibility in the time period to allow agreements that are not necessarily annual. He explained that by striking "annual" and allowing "periodic" there could be six-month, monthly, or other agreements to provide a structure that is most beneficial for both a provider and the patient. 4:03:11 PM MS. KOENEMAN, on behalf of the prime sponsor, stated that this is the language which was contained in the original version of the bill, so the prime sponsor is supportive of this language. MS. WING-HEIER related that the division had asked for "periodic" to be changed to "annual" simply because insurance policies are annual. She posed a scenario of someone choosing to buy a health care policy with a high deductible of $20,000 and buying a direct health care agreement at $100 a month. If that changed in three months, she pointed out, then the person's decision for the $20,000 deductible health care policy might not have been the best one. That is the only reason the division had asked for annual, she stated, but it is not a huge deal. CO-CHAIR SPOHNHOLZ said she appreciates the intent to be more flexible but since insurance is done on an annual basis, direct care agreements should also be made on an annual basis. Periodic is an undefined term whereas annual is clear, she stated, and passage of this bill is to ensure access to this kind of care as well as provide clarity, transparency, and protection. She said she cannot support Amendment 6 as drafted. 4:05:37 PM CO-CHAIR FIELDS maintained his objection. 4:05:42 PM A roll call vote was taken. Representative Kaufman voted in favor of Amendment 6 to HB 176, Version B. Representatives Schrage, Snyder, Nelson, Fields, and Spohnholz voted against it. Therefore, Amendment 6 to HB 176 failed to be adopted by a vote of 1-5. 4:06:25 PM The committee took a brief at-ease. 4:06:30 PM CO-CHAIR SPOHNHOLZ moved to report the proposed CS to HB 176, version 32-LS0784\B, Marx, 4/7/22, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 176(L&C) was moved out of the House Labor and Commerce Standing Committee. 4:06:58 PM CO-CHAIR FIELDS stated that he gives the Legislative Legal Services the ability to make any necessary and conforming changes.