SB 197-DIRECT HEALTH CARE AGREEMENTS  2:19:06 PM CHAIR COSTELLO reconvened the meeting and announced the consideration of SENATE BILL NO. 197 "An Act relating to direct health care agreements; and relating to unfair trade practices." She noted that this was the first hearing and the intention was to hear both invited and public testimony. 2:19:29 PM SENATOR SHELLEY HUGHES, Alaska State Legislature, Juneau, Alaska, sponsor of SB 197, introduced the legislation. The sponsor statement read as follows: Senate Bill 197 establishes guidelines for direct health care agreements between medical providers and patients. Direct Health Care (DHC) is a subscription for health care services in which patients, employers, or health plans pay primary care providers a flat, simple periodic fee in exchange for access to a clearly established broad range of health care services. DHC removes some of the financial barriers patients encounter in accessing routine primary care, including preventive, wellness, and chronic care services. With a DHC plan, health care providers aren't burdened with time-consuming insurance paperwork, leaving more time to spend with patients. Under DHC agreements (there are currently over 1,400 direct primary care practices in 48 states), patients typically get same day access or next day visits and the option to call or text their clinic 24/7. Health outcomes for patients improve under direct health as there is a focus on routine and preventative health care. Patients also feel less restrained from interacting with their provider and typically seek care before their symptoms become serious. Consequently, visits to the emergency room are also reduced. Senate Bill 197 clearly spells out the elements of a DHC agreement and emphasizes consumer protections. Further, the bill clearly defines that Direct Health Care agreements are not insurance. They do, however, lower the hurdles to access for many Alaskans. Alaskans spend more on health care per capita than any other state in the union. At a time when many Alaskans fear the uncertainties of the economy, pandemic, and global instability, direct health care agreements can provide an option for low-cost, stable access to quality healthcare. SENATOR HUGHES reported that 32 states had adopted similar agreements and Alaska was one of 12 states with pending legislation. She expressed hope that the committee would agree that it was time for the legislature to make this sensible option available to Alaskans. CHAIR COSTELLO asked Mr. Whitt to provide the sectional analysis. 2:22:45 PM BUDDY WHITT, Staff, Senator Shelley Hughes, Alaska State Legislature, Juneau, Alaska, presented the sectional analysis for SB 197 on behalf of the sponsor. It read as follows: Section 1 18.23.500 Page 1, Line 4 through Page 4,  Line 14 Adds new section “Direct Health Care Agreements” to Chapter 23 of Title 18. Section (a), page 1, line 6 through page 2, line 20 – Defines a Direct Health Care Agreement as a written agreement between patient, government entity or private business and a provider for specific services in exchange for an annual fee, that services provided for the fee must be specified, and that the patient may submit an insurance claim for services rendered beyond those specified in the agreement. Section (b), page 2, lines 21 through 27 – Directs that providers must allow a patient to terminate the agreement within 30 days and that if the agreement is terminated, the provider shall provide a refund of the payments made under the agreement, less payments made for services already provided. Section (c), page 2, line 28 through page 3, line1 – An agreement between provider and patient may be terminated in writing after thirty days, and the provider may give a refund, charge a termination penalty or termination fee. Section (d), page 3, lines 2 through 5 – An agreement between provider and employer or government entity may be terminated in writing after thirty days, and the provider may give a refund, charge a termination penalty or termination fee. Section (e), page 3, lines 6 through 10 – Modifications or renewal to an existing agreement can be made upon written agreement between both parties. A provider may not make a change to the annual fee more than once a year and a 45-day written notice must be given prior to a change in fee. Section (f), page 3, lines 11 through 14 – Specifies that a direct health care agreement is not subject to the consumer protections in Title 21 (Insurance) but are subject to other consumer protections including AS 45.45.915 (Section 2 of the bill). Section (g), page 3, lines 15 through 24 – A Direct Health Care Agreement provider may not misrepresent themselves or the services that they provide in a direct health care agreement. Section (h), page 3, line 25 through page 4, line 14 – Specifies that a direct health care agreement is not health insurance or underwriting, that direct health care agreement services are exempt from regulation by the Division of Insurance, and that a certificate of authority or license to market is not required to offer or execute such an agreement. The definitions of “health care provider” and “health care service” are given in subsections 1 and 2 of this section. Section 2 AS 45.45.915 Page 4, line 16 through page  5, line 5 Adds new section “Direct Health Care Agreements” to Chapter 45 of Title 45 Section (a), page 4, lines 16 through 22 – A health care provider may not refuse to enter into a Direct Health Care Agreement based upon any characteristic of a class of persons protected by federal and state laws that prohibit discrimination. Section (b), page 4, line 23 through page 5, line 5 – A health care provider may only decline to enter an agreement or cancel an existing agreement if the patients care needs are beyond that which the health care provider can provide. An existing agreement may only be terminated once the provider has transferred the patient to a health care provider that can provide the needed level of care and has agreed to provide the patient with that needed level of care. The definitions of “direct health care agreement” and “health care provider” are the same as those found in section [1, page 4, lines 6-14]. Section 3, Page 5, Lines 6 through 8 Adds violations of sections 1 and 2 of the bill to the list of unlawful acts under the unfair trade practices and consumer protections clause of the AS 45.50.471(b). 2:27:14 PM MR. WHITT advised that the sponsor asked him to draft a response to the analysis of the fiscal note from the Department of Health, OMB Component Number 242. He offered to speak to that now if that was the chair's wish. 2:28:10 PM CHAIR COSTELLO expressed her preference to wait until a subsequent hearing. She asked if this would be a limitation for providers because they are essentially committing to be available on short notice to the individuals that paid for the service. SENATOR HUGHES replied that she was aware of clinics that were merging the models of insurance and direct-pay healthcare agreements so in those settings it would be the provider's choice. The model clearly defines the set of services so subscribers that need services outside the list would have to pay for the extra items. CHAIR COSTELLO observed that the bill indicates that insurance is not involved until the patient goes outside the list of preapproved services. She asked if that means that the monthly fee does not count toward the insurance deductible. SENATOR HUGHES replied that's correct. She added that she neglected to mention during the introduction that this is a good option for small employers. They could offer health insurance for catastrophic events and a direct-pay healthcare agreement would cover primary care and preventative treatment. Nationwide, it is generally primary care providers that are using these direct-pay healthcare agreements, but the option is available for specialists as well. 2:30:55 PM SENATOR GRAY-JACKSON asked who determines the monthly fee. SENATOR HUGHES replied it is an agreement between the provider and the patient, but the model is that each patient would pay the same fee. SENATOR GRAY-JACKSON asked for an estimate of what the fee might be. MR. WHITT replied the fees vary from state to state but his research has found fees ranging from $100 to $250 per month. The demographic makes a difference but it's based on the number of items on that list that are covered under the agreement. CHAIR COSTELLO asked Ms. Wing-Heier to come forward. 2:33:17 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community, and Economic Development, Anchorage, Alaska, introduced herself. SENATOR STEVENS asked if there would be an advantage for insurance companies to cover the fee [for direct-pay healthcare agreements]. MS. WING-HEIER replied insurance companies will stay out of direct-pay healthcare agreements. She posed a hypothetical to demonstrate that a $100 per month direct-pay healthcare agreement could make good, cost-saving sense for a family that had a $15,000 deductible health insurance plan. SENATOR STEVENS asked for confirmation that Medicare would not pay the fee for a direct-pay healthcare agreement. MS. WING-HEIER replied Medicare won't touch direct-pay healthcare agreements but the division believes that Alaskans on Medicare will find them beneficial because it can be so difficult to find primary care physicians who treat Medicare patients. 2:35:04 PM SENATOR GRAY-JACKSON asked if the fee for a family of four would be different than for an individual. MS. WING-HEIER replied she would assume so. CHAIR COSTELLO offered her understanding that individuals within a group would be paying the same fee and this could include a small business. This is an option that encourages preventative care. 2:36:29 PM SENATOR STEVENS asked Ms. Wing-Heier if she had any concerns about these agreements. MS. WING-HEIER replied the division supports the bill, but to avoid confusion, AS 21.03 would need to be amended to list the other types of practices that are not insurance. She added that the division is fairly sure these agreements are already in use in Alaska, but because they are not allowed right now, she did not want to hear testimony about this practice here in the state. SENATOR MICCICHE asked why they aren't already allowed. MS. WING-HEIER explained that the definition of direct-care health care sounds very much like insurance but the specific definition has not been added to AS 21.03, which is the scope of code for insurance. Until that's done, there is a problem because it sounds as though the doctor is the insurance company. SENATOR MICCICHE pointed to paragraph (3) on page 2, lines 7-9 that says these agreements must clearly state they are not health insurance and they don't meet any federal mandate for health insurance. He asked why one of these agreements wouldn't fulfill the mandated insurance coverage under federal law if it provided those services and care. MS. WING-HEIER replied the federal law only recognizes insurance companies and self-insured plans, not doctors providing the care under these agreements. The agreement could list all the essential benefits and provide the same services, but still not be a qualified health plan. SENATOR MICCICHE asked if that was a gap in the Affordable Care Act. If ACA's goal was to provide adequate health care for all Americans, he said these agreements are a more creative solution. MS. WING-HEIER replied they are creative but they do not cover catastrophic losses because there would be too few people to spread the risk for such things as a million dollar baby or someone with hemophilia. A private practice could not support that kind of risk. CHAIR COSTELLO listed the individuals available to answer questions. 2:40:58 PM At ease 2:42:10 PM CHAIR COSTELLO reconvened the meeting. 2:42:23 PM CHAIR COSTLLO found no one who wished to comment and she closed public testimony on SB 197. She held SB 197 in committee for future consideration.