SB 41-HEALTH INSURANCE INFO.; INCENTIVE PROGRAM  2:12:23 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." CHAIR COSTELLO noted that the bill was heard last year and today there was a committee substitute for the committee to consider. 2:12:42 PM SENATOR REVAK moved to adopt the work draft committee substitute (CS) for SB 41, work order 32-LS0247\I, as the working document. CHAIR COSTELLO objected for an explanation of the changes. 2:13:09 PM SENATOR SHELLEY HUGHES, Alaska State Legislature, Juneau, Alaska, sponsor of SB 41 thanked the committee for hearing the bill a second time. She stated that this bill provides an opportunity to help with the high cost of healthcare in the state. 2:13:56 PM BUDDY WHIT, Staff, Senator Shelley Hughes, Alaska State Legislature, Juneau, Alaska, read the changes between version A and version I for SB 41. He explained that the CS makes structural changes to the bill, but it does not change the result. [Original punctuation provided.] Page 1, Line 3  Replaces "the average price paid" in the title with "the median of the contract rates recognized by an insurer." This change is made throughout Version I. Sec. 2 Page 1 Version I removes entirely the previous section 2, which required health care providers to provide to any uninsured patients estimates of total charges that include any financial assistance available from the provider and direct the patient to any available websites that provide information about standard charges for that type of health care service. The following sections are renumbered accordingly. 2:15:17 PM  Sec. 3 AS 21.36.100 Page 3, Lines 2-18 Adds to statute an exception for the incentive program described in section 4, AS 21.96.220, to allow for rebates of premiums payable for health insurance coverage. Sec. 4 AS 21.96 Page 3, Lines 19-31, Page 4, Lines  1-31, Page 5, Lines 1-31, Page 6, Lines 1-15 Version I inserts the title "Article 2. Health Care Insurance Incentive Program," before adding new sections. In section 21.96.210, the term "a health care insurer" is updated to specify "a health care insurer that offers a health care insurance policy in the group or individual market." This change is made throughout Version I. In Version A, this section requires health care insurers to provide an interactive online mechanism for covered individuals to request information on payments made by the insurer to network health care providers for services and compare prices among network providers. In Version I, this section requires that health care insurers must provide comprehensive comparison guidance by telephone and online, and further, must allow a covered individual to compare the amount of cost sharing that he would be responsible for paying. The health care insurer must comply with the federal code regarding the maintenance of such a price comparison tool. 2:16:48 PM In section 21.96.220(a), the language is updated to specify "a monetary incentive" instead of "an incentive." Version I removes the list of specific health care service categories which a health care insurer must include in the incentive program. The language in section 21.96.220(b) from Version A is separated into three subsections in Version I: (b), (c), and (d). Additional language is inserted to specify that a health care insurer is not required to provide an incentive payment if the cost savings to the insurer is $200 or fewer. The previously lettered subsection (c), which stated that the average price must be based on a period that does not exceed one year is removed in Version I. 2:17:44 PM In subsection (e), Version I states that an incentive payment is not a violation of AS 21.36.100, which is also specified in section 3 of the bill. Sec. 21.96.260 is updated from requiring that health care insurers file annual reports regarding their incentive programs with the director of the Division of Insurance, to requiring that they provide that information to the director if requested. Subsection (b) is updated to include this information in the director's annual report, submitted to the House and Senate Labor & Commerce Committees, rather than in a separate report. Sec. 21.96.280 is a new section in Version I which specifies that sections 21.96.210 - 21.96.300 apply to a health care insurance policy or contract but do not apply to excepted exempted benefits, except for those benefits provided under dental and vision insurance policies. Section 21.96.300 replaces the definition of "health care insurance plan" with definitions for "health care insurance" and "policy" to conform to technical language fixes made throughout Version I. 2:19:05 PM Sec. 8 Page 7, Lines 13-18  Version I specifies that the director of the Division of Insurance may adopt regulations necessary to implement this Act, rather than broadly the Department of Commerce Community and Economic Development. Sec. 10 Page 7, Line 20 Updates the effective date from January 1, 2022 to January 1, 2023, for all sections but 7 and 8, which take effect immediately. 2:19:35 PM CHAIR COSTELLO asked what Sections 7 and 8, which take effect immediately, are about. MR. Whit explained that Section 7 is uncodified law about the report that was mentioned and Section 8 is transition language for the regulations for this Act, which fall under the director of the Division of Insurance. CHAIR COSTELLO observed that this allows the division to start the regulation process before the law becomes effective. MR. WHIT replied that is correct. SENATOR HUGHES offered her belief that the changes in this committee substitute enhance what the bill seeks to do. For example, version I says a health care insurer is not required to provide an incentive payment if the cost savings to the insurer is less than $200. Also, the insurance companies only have to file the reports at the request of the director, not automatically. The CS also specifies that the incentive to get people to shop will be monetary, which is in line with the goal to reintroduce free market principles into the healthcare industry. Somebody who shops for a less expensive provider will share in the savings. She noted that the online tool, which did not work when the bill was heard last year, will be required at the federal level and that will make this bill work. The target date for those online tools has been extended to July 1, 2022. 2:22:02 PM CHAIR COSTELLO removed her objection. Finding no further objection, version I was adopted. SENATOR GRAY-JACKSON asked for a brief explanation of what the bill does. 2:22:57 PM At ease. 2:23:45 PM CHAIR COSTELLO reconvened the meeting and asked the sponsor to refresh the members' recall of what SB 41 does. SENATOR HUGHES explained that this is a pro-consumer bill that seeks to reduce health care costs for Alaskans. She cited the example of somebody who gets knee surgery. The individual would be able to use an online tool through their insurance company to find the providers for the procedure and the cost. If the cost ranges from $5,000 to $15,000, the average would be $10,000. If the individual selects a provider that charges $7,000, the individual, the employer, and the insurance company each would realize a $1,000 savings. She opined that this monetary incentive would make individuals shop. This is more user friendly for the consumer than previous legislation that also intended to reduce health care costs. She relayed that several states have passed similar legislation and it has proved to be successful. She posited that over time the providers who charge the most may nudge their prices down. She said more expensive care does not equate to better care and her belief is that someone who shops is more likely to listen to their provider and take better care of their health. CHAIR COSTELLO observed that the language on page 4, line 17 talks about median rates and paragraph (21) on page 4 says the consumer receives at least 50 percent of the difference between what they selected and the median rate. She asked the sponsor to comment. SENATOR HUGHES offered her understanding that if an employer is not providing the insurance, the consumer would split the savings 50:50 with the insurance company. CHAIR COSTELLO welcomed Lori Wing-Heier. 2:28:34 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community and Economic Development (DCCED), Anchorage, Alaska, introduced herself. CHAIR COSTELLO asked how SB 41 will affect the health care of Alaskan consumers. MS. WING-HEIER explained that the bill tells consumers that they will benefit from the savings if they find an out of network provider that is charging less for a given procedure. On an employer sponsored plan the savings would be split equally between the employer, the insurance company, and the consumer. Each would receive one-third of the savings. The individual market does not have employer-sponsored plans so the split would be 50:50. The bill helps encourage Alaskans to look at the cost of health care, how much their insurance company would pay, and to consider selecting the best price. The incentive is that the consumer will recognize some of the savings from their selection. 2:29:56 PM SENATOR MICCICHE said he likes the concept, but wonders whether the reimbursement could possibly be greater than the out-of- pocket payment. He provided a hypothetical example of a heart surgery with costs much higher and much lower than the median cost of $150,000. The insured's selection saved $50,000 and their out-of-pocket payment was $6,000. He asked if the consumer could profit from that savings or if there would be a cap. MS. WING-HEIER said the bill does not cap what the insured can recover. She explained that most plans have an annual out-of- pocket maximum so the consumer's portion of the savings could exceed what they spent out of pocket. SENATOR MICCICHE asked if this could also apply to elective surgery such as braces. MS. WING-HEIER answered yes. 2:31:55 PM SENATOR GRAY-JACKSON provided a hypothetical example of a surgery that ranged in cost from $75 to $100. She asked if the $25 difference was the amount that would be split. MS. WING-HEIER answered yes; the insured is not required to go to the out-of-network doctor that charges less for the procedure, but it is an option for the insured. A consumer that selects that option may benefit from the savings. She referenced the Chair's earlier observation and explained that the division asked the sponsor to use the median rate in the bill because that is the measure required in the federal No Surprise Act. CHAIR COSTELLO referenced Senator Gray-Jackson's example and offered her understanding that the bill does not apply to any cost that is less than $200. MS. WING-HEIER replied that is correct. SENATOR MICCICHE noted the bill packet contains information about legislation enacted in Florida that authorizes insurers to participate in the individual and small group markets to develop shared savings programs for enrollees. He asked if any other states have an incentive similar to SB 41 and if the savings can be above the out-of-pocket costs. MS. WING-HEIER recalled that New Hampshire and Maine have a similar statute, but she did not know if those allow realized savings that are above the out-of-pocket amount. 2:34:56 PM CHAIR COSTELLO asked if the consumer has to talk to all the doctors involved in a given procedure to determine which option is cheaper. MS. WING-HEIER answered no; the incentive is based on what the surgeon charges and it would be a separate incentive program if the insured wanted to price compare anesthesiologists as well. She noted that a consumer looking for an overall price generally will know the surgery center and the anesthesiologist the doctor uses. CHAIR COSTELLO asked what happens if the consumer is not able to get the information from the provider because they're told "it depends." She relayed her experience 2:37:11 PM MS. WING-HEIER said federal law requires providers to give a good faith estimate, but acknowledged the possibility of unforeseen circumstances that could increase the charge. It happens but it is not an everyday occurrence. CHAIR COSTELLO asked how the division contemplates educating Alaskans about the bill. MS. WING-HEIER replied, should the bill be signed into law, the division would work with the insurance companies to ensure they tell their policy holders that this exists. The division would also post the information on its website and through social media. CHAIR COSTELLO asked what happens if the insured finds an in- network provider that is cheaper. MS. WING-HEIER replied that should not affect the incentive. Theoretically, she said there should not be much difference between what providers in the same network are paid. 2:39:47 PM SENATOR REVAK asked if the insured could realize savings in excess of the deductible. MS. WING-HEIER replied it is possible. SENATOR REVAK said he appreciates the idea of shared savings. He relayed that his office looked at shared savings for Medicaid and found that other states imposed a timeframe because people were trying to game the system to get cash back. He suggested that was a consideration. CHAIR COSTELLO observed that in some instances the deductible could be as low as $250. She asked Ms. Wing-Heier to comment. MS. WING-HEIER said that for a large more expensive procedure, the differential between the network rate and the less expensive out-of-network rate could exceed the deductible. It's less likely if the procedure is less costly. SENATOR REVAK restated that he was not opposed to the idea, but when he looked at it in the Medicaid context he found the feedback from other states about unintended consequences interesting. He didn't know if a fix was necessary, but it was something to think about, he said. MS. WING-HEIER responded that the bill is meant to benefit consumers and if the division saw somebody trying to game the system they would use the statutory authority available to stop it as quickly as possible. 2:43:57 PM CHAIR COSTELLO asked whether the bill provides the authority for the division to write regulations to address Senator Revak's concerns. MS. WING-HEIER answered yes; the bill authorizes the division to adopt regulations. The division would work with the public, the providers, and the payers to identify gamers and take action accordingly. CHAIR COSTELLO asked whether travel to an urban center for surgery would be factored in. MS. WING-HEIER answered that traveling to a place where there are more facilities and more competitive prices would have to be a piece. The procedure itself would fall under the bill, but she did not believe there would be incentive programs to pay for travel. 2:45:26 PM At ease 2:47:47 PM CHAIR COSTELLO reconvened the meeting and asked Ms. Wing-Heier if she would like to comment. 2:48:00 PM MS. WING-HEIER stated that she would return when the bill is heard next with different scenarios for how the bill would affect out-of-pocket and deductible costs and if there would be a way to impose a cap so no one is able to profit or game the system. CHAIR COSTELLO suggested the members send any questions to her office for distribution to the sponsor and the division director. Those responses would also be reviewed at the same time. CHAIR COSTELLO held SB 41 in committee for future consideration.