SB 41-HEALTH INSURANCE INFO.; INCENTIVE PROGRAM  1:55:44 PM CHAIR COSTELLO announced the consideration of SENATE BILL NO. 41 "An Act relating to health care insurers; relating to availability of payment information; relating to an incentive program for electing to receive health care services for less than the average price paid; relating to filing and reporting requirements; relating to municipal regulation of disclosure of health care services and price information; and providing for an effective date." 1:56:13 PM SENATOR SHELLEY HUGHES, Alaska State Legislature, Juneau, Alaska, sponsor of SB 41, introduced the legislation speaking to the sponsor statement: Alaska's health care costs are among the highest in the nation and continue to rise. Through free market principles, SB 41 will bend the cost curve down over time to help relieve the disproportionate burden of health care costs on family budgets, seniors on fixed incomes and employers providing insurance coverage to their employees. Senate Bill 41 will provide Alaskans with the information they need to plan financially for their health care decisions. The bill requires health care provider and facilities to list meaningful cost information online and onsite. The bill also requires a health care provider and insurance company disclose full cost information within five days of request by a patient specific to their condition, including any expected out of pocket costs. The bill also adds a mechanism so insurance companies will provide an incentive a shared savings check to policyholders who choose an in-network provider who charges below the average in-network cost. Employers providing insurance coverage for employees will also be eligible for some of the shared savings. This approach will help bring down the high cost of healthcare in Alaska by encouraging consumers to shop and providers to compete for Alaska's healthcare dollars. Several states have either passed or are currently working on healthcare cost transparency legislation. SB 41 is among the most innovative approaches as a result of the incentive provision and is expected to bend the cost curve more effectively than other efforts because of this. The Alaska Health Care Consumer's Right to Shop Act will empower Alaskans with the tools needed to make healthcare choices that fit their needs and work for their budgets while introducing a bit of competition into the healthcare market in Alaska to help nudge down the costs over time. SENATOR HUGHES explained that somebody who selects a provider who charges less than the average cost for that procedure will be able to share in the savings. For example, if the average cost of a procedure is $14,000 and the insured selected the provider who charged $12,000 for the procedure they would share in the $2,000 savings with the employer and the insurer. The bill allows the insured to receive a minimum of one third of the savings. Somebody who does not have an employer would receive half of the savings. The idea is to provide an incentive for Alaskans to think about the providers they select. The price comparison tool will be an asset. 2:03:27 PM SENATOR GRAY-JACKSON referred to the example and asked if the insured would pay $12,000. SENATOR HUGHES answered yes if the insured had met the deductible. SENATOR HOLLAND expressed appreciation for the bill; it seems complicated but in essence is fairly simple. SENATOR HUGHES expressed appreciation for Lori Wing-Heier's help with the bill. She said there is no silver bullet, but SB 41 will help loosen free market principles and offer help to nudge prices down in the healthcare industry. 2:05:49 PM LISA HART, Staff, Senator Shelley Hughes, Alaska State Legislature, Juneau, Alaska, read the following text from the PowerPoint describing SB 41 into the record: Alaska has the highest health care costs per capita in the entire United States. The cost of healthcare is eroding the bottom line for business owners small, medium and large. More money that employers put into healthcare means less money to create more jobs. Observers have offered several explanations for Alaska's extra-high health care costs: • Limited competition among providers, especially specialty physicians • Particularly high compensation for providers, specialty physicians who perform procedures (such as orthopedic surgeons, cardiologists, and neurosurgeons) • Hospital profit margins in urban Alaska that are higher than national averages • Regulation by the State of Alaska, particularly the "80th percentile rule" • Absence in Anchoragethe state's largest communityof public and/or teaching hospitals that are open to all patients Right to Shop empowers patients by rewarding them when they seek out high-value care. It is pro-patient as it lowers healthcare costs, improves patient care, contains out-of-pocket costs and increases patient access. Prices vary widely in health care. For example, the same x-ray on the same kind of machine in different locations can vary in price from a couple hundred dollars to thousands. Surgery by the same doctor but in different facilities can range from a few thousand dollars to tens of thousands. 2:08:01 PM How does Right to Shop work? 1. A doctor recommends a medical service 2. Patients connect with their insurer by phone or go on-line to find their best options 3. Patients choose the best location at the best value 4. Patients have their procedure at the location of their choice 5. Patients, employers and insurance companies share in the savings The Transparency in Coverage rule was released by the Trump administration in Oct 2020. The rule requires most group health plans, and health insurance issuers in both the group and individual market to disclose price and cost-sharing information to participants, beneficiaries, and enrollees. Right now the requirements are being finalized to give consumers real-time, personalized access to cost- sharing information, including an estimate of their cost-sharing liability, through an internet based self-service tool, essentially an online price comparison tool. These tools are being developed now with an expected launch date of January 2022. Some states have initiated Right to Shop programs for state employee health plans while others have enacted legislation encouraging private insurers to develop shared savings incentive programs. Florida, Maine, Nebraska, Tennessee, Utah and Virginia enacted legislation requiring or encouraging private health plans to initiate Right to Shop programs for enrollees. SB 41 is among the most innovative approaches as a result of the incentive provision and is expected to more effectively bend the cost curve. Right To Shop empowers patients with the knowledge they need to make smart choices about how and where they consume health care. They're given tools to find the best value providers and, when they choose those options, they get a share of the savings. SENATOR HOLLAND asked her to repeat which states have enacted similar legislation. MS. HART listed Florida, Maine, Nebraska, Tennessee, Utah and Virginia and clarified they are in the private insurance group, not public employee. SENATOR HOLLAND asked if any states have adopted the incentive provision. MS. HARD replied Maine has enacted this legislation and New Hampshire did something similar for public employee health insurance programs. CHAIR COSTELLO related her experience that it is almost impossible to determine the cost of a procedure until the billing stage. She asked if consumers in states that have similar legislation have actually been able to shop. SENATOR HUGHES acknowledged that the final cost might differ from the quote because there could be complications. There would be an allowance for that. She understood that the states that have this legislation have a provision for that and Alaska would want that too. She acknowledged that this makes it difficult for insurers to develop the cost comparison tool. SENATOR HUGHES said it is a little unique to offer the employer a share in the savings, but the belief is that it will motivate employers to encourage their employees to shop. CHAIR COSTELLO invited Lori Wing-Heier to comment on the bill. 2:14:13 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community and Economic Development (DCCED), Anchorage, Alaska, advised that she and the sponsor have held many Microsoft Teams meetings to give insurers access to the sponsor and the division to address any concerns with the bill. To that end, Senator Hughes has said she will look at an effective date so the tools the insurers need to do for the federal bill can be finished and in operation when SB 41 goes into effect. The federal tools are to be available January 1, 2022, but colleagues in Washington, DC have indicated there is a concern about being ready by that date. She described it as a chicken and egg situation because the federal government has to tell states what those tools should look like and that has not happened. She said to have the tools designed and working on all Blue Cross systems, Moda, Aetna, and UnitedHealthcare is a large undertaking, and it is not clear that the federal government will make the January 1 date. CHAIR COSTELLO asked if SB 41 is dependent on the all-payer database (APCD) passing. MS. WING-HEIER answered no; they would piggyback nicely but one could pass without the other. CHAIR COSTELLO offered her understanding that depending on the insurance coverage, the price of a procedure differs from one consumer to the next. Based on that assumption, she asked if an average cost is calculated by geographic region or statewide. MS. WING-HEIER answered it is both. When the division interacted with the Centers for Medicare and Medicaid on the federal bill, they submitted information by geographic region because the cost of a procedure differs based on where it is performed. She predicted that the ACPD would implement a one-stop-shop for consumers to look at costs of procedures, whereas the federal bill would necessitate looking to each insurance company. She acknowledged that it would be cumbersome for families that have coverage from more than one insurance company. CHAIR COSTELLO asked if this would increase costs for providers for administration or data entry. MS. WING-HEIER answered no because the insurers will provide the database. CHAIR COSTELLO asked Emily Ricci if the administration had a position on SB 41. 2:18:18 PM EMILY RICCI, Chief Healthcare Administrator, Division of Retirement and Benefits, Department of Administration, Juneau, Alaska, summarized her understanding of SB 41 and said the division could absorb the provisions of SB 41 into their standard health plan programming and strategic development, should the bill pass. 2:19:21 PM CHAIR COSTELLO stated she would hold SB 41 for further consideration.