Legislature(2017 - 2018)BARNES 124

04/15/2018 10:00 AM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 15 Minutes After Adjournment --
Heard & Held
-- Public Testimony --
Heard & Held
-- Public Testimony --
Moved HB 376 Out of Committee
-- Public Testimony --
              HB 193-HEALTH CARE; BALANCE BILLING                                                                           
3:31:04 PM                                                                                                                    
CHAIR KITO  announced that  the next order  of business  would be                                                               
HOUSE  BILL  NO.  193,  "An   Act  relating  to  insurance  trade                                                               
practices  and frauds;  and relating  to  emergency services  and                                                               
balance billing."                                                                                                               
LEN SORRIN, Premera  Blue Cross Blue Shield  of Alaska, testified                                                               
in opposition  to HB 357.   He paraphrased his  written testimony                                                               
[included in committee packet],  which reads as follows [original                                                               
punctuation provided]:                                                                                                          
        • Thank you, Chair Kito and Members of the                                                                              
        • For the record, I am Len Sorrin with Premera Blue                                                                     
          Cross Blue Shield of Alaska.                                                                                          
        • I am here today testifying with concerns on HB
        • We share your commitment to ensuring that our                                                                         
          members  are not  subject  to  balance billing  or                                                                    
          surprise billing  by non-contracted  providers. We                                                                    
          understand    that   surprise    billing   imposes                                                                    
          substantial  and unexpected  financial burdens  on                                                                    
          Alaskan   families,  many   of  who   are  already                                                                    
        • The challenge is  to  achieve  that  goal  while                                                                      
          moderating  Alaska's  health   care  premiums  and                                                                    
          costs, which are already among  the highest in the                                                                    
          nation.  HB 193  can achieve  the goal  of banning                                                                    
          balance  billing, but  it  will exacerbate  Alaska                                                                    
          health care costs and premiums  as a result of its                                                                    
          use of  the 80th  percentile and 350%  of Medicare                                                                    
          as the likely rates to  be paid to providers under                                                                    
          the bill.                                                                                                             
        • The 80th percentile provision  in  the bill  has                                                                      
          been characterized  as just  one of  three options                                                                    
          in the bill. That much  is true. However, the bill                                                                    
          requires  that carriers  pay  the  highest of  the                                                                    
          three  options. The  80th percentile  will be  the                                                                    
          highest in the vast majority  of cases. And in the                                                                    
          rare case it  is not, an even higher  rate will be                                                                    
        • Make no mistake: the use of the  80th percentile                                                                      
          as   the  highly   likely  mandatory   choice  for                                                                    
          reimbursement  will increase  costs for  Alaskans.                                                                    
          Outside analyses confirm this.                                                                                        
        • The recent study by Milliman makes clear that the                                                                     
          80th  percentile standard  has contributed  to the                                                                    
          unsustainable  level  of   health  care  costs  in                                                                    
          Alaska.   In   2015,   the  Alaska   Health   Care                                                                    
          Commission   recommended  that   Alaska  "consider                                                                    
          modifying the  current usual and  customary charge                                                                    
          payment  regulation  to eliminate  the  unintended                                                                    
          adverse pricing consequence."                                                                                         
        • In addition to the problems presented by the use                                                                      
          of  the 80th  percentile standard,  the Department                                                                    
          of   Administration   stated   that   the   bill's                                                                    
          reimbursement    structure     "could    encourage                                                                    
          providers to  leave the networks and  could result                                                                    
         in long-term growth in the cost of services."                                                                          
        • Our experience reflects  that  concern.  Let  me                                                                      
          provide you examples.                                                                                                 
        The 80th percentile  regulation requires that  it be                                                                    
        updated  twice   a  year.   This   creates  a   cost                                                                    
        compounding impact  that often  exceeds the  broader                                                                    
        health  care  cost  trend,   increasing  costs  even                                                                    
        Premera's 80th percentile  updates in  2017 resulted                                                                    
        in UCR  trends that  were over  4 times  higher than                                                                    
        Premera's overall  unit cost  trend  for 2017.  That                                                                    
        drives  a   real   escalation   in  overall   costs,                                                                    
        increasing  premiums   and  consumer   out-of-pocket                                                                    
        The guaranty  of 80th  percentile reimbursement  for                                                                    
        out of network care has also caused contracted rates                                                                    
        to be far higher  than they would be  otherwise. Our                                                                    
        contracted network  rates  in  Alaska for  the  four                                                                    
        hospital-based specialties are between  32% and 275%                                                                    
        higher than in Washington  as a percent  of Medicare                                                                    
        ... and that  is on top  of Medicare rates  that are                                                                    
        already 25%  higher  here.  Other specialties  range                                                                    
        upward of 1000% of Medicare.                                                                                            
        • The challenge in determining fair  reimbursement                                                                      
          is to not  disrupt what can be  a very challenging                                                                    
          environment for health plans  to build networks in                                                                    
          Alaska. Premera's Alaska network  has grown in the                                                                    
          last few  years and continues  to do so.  But it's                                                                    
          been  very   hard  work,  due   in  part   to  the                                                                    
          attraction of the  80th percentile requirement for                                                                    
          out-of-network care.                                                                                                  
        • That challenge can be greater when attempting to                                                                      
          contract  with  hospital   based  emergency  care,                                                                    
          anesthesiology,    radiology   pathology,    where                                                                    
          members   are  unable   unable  to   choose  their                                                                    
          provider. As  a result,  these provider  types are                                                                    
          guaranteed to  see health plan  members at  an in-                                                                    
          network hospital  with or without a  contract, and                                                                    
          hence   have   less   incentive   than   providers                                                                    
          generally to contract with health plans.                                                                              
        • We want to  continue our  progress  in  building                                                                      
          bigger and  stronger networks  for our  members to                                                                    
          access,  offering  members  lower  out  of  pocket                                                                    
        • Reimbursing out of  network  care  at  the  80th                                                                      
          percentile  of   billed  charges  as  part   of  a                                                                    
          solution  to  balance  billing  will  impede  that                                                                    
          effort. While  balance billing may  be prohibited,                                                                    
          Alaskans  will be  exposed to  ever-increasing out                                                                    
          of  pocket costs  as providers  take advantage  of                                                                    
          the     out-of-network    reimbursement     levels                                                                    
          unencumbered  by  the   risk  of  balance  billing                                                                    
          members. Member coinsurance  costs overall will be                                                                    
          higher when based on  the 80th percentile standard                                                                    
          than they would when  based on a more market-based                                                                    
          rate. Premiums will increase as well.                                                                                 
        • We've proposed removing the 80th percentile with                                                                      
          three  options  for reimbursement  standards:  the                                                                    
          first two are the  median health plan fee schedule                                                                    
          for the  specific specialty (as is  in the present                                                                    
          bill)  and  two   different  percent  of  Medicare                                                                    
          options. The  third option we've proposed  is even                                                                    
          simpler:  it's simply  the  median contracted  fee                                                                    
        • It's hard to come up with a better indicator of                                                                       
          the actual  health care market  than one  based on                                                                    
          the  median fee  schedule to  which providers  and                                                                    
          health plans  have agreed. Markets are  defined by                                                                    
          a price or term to which parties agree.                                                                               
        • This is an opportunity for a balance billing                                                                          
          solution  for  Alaskans  to actually  reflect  the                                                                    
          market   in   Alaska   and  maintain   broad   and                                                                    
          affordable network access for Alaskans.                                                                               
        • We would also like to share with the committee                                                                        
          concerns    unrelated    to   the    reimbursement                                                                    
        • First, we have suggested an amendment to the                                                                          
          "hold harmless"  section. The  provision currently                                                                    
          requires an  insurer to "hold harmless"  or ensure                                                                    
          that a  member does not  incur costs in  excess of                                                                    
          what  they owe  for the  in-network benefit  under                                                                    
          the bill. Premera will of  course pay claims under                                                                    
          the bill  at the in-network benefit  level and the                                                                    
          member's responsibility under  their contract with                                                                    
          us  will be  limited to  that amount.  However, we                                                                    
          have  no   ability  to  control  whether   a  non-                                                                    
          contracted provider  will bill a member  in excess                                                                    
          of the  amounts allowed  under the bill.  We would                                                                    
          request that  the provision be amended  to reflect                                                                    
          that reality.                                                                                                         
        • Second, we agree with the Department of                                                                               
          Administration that the bill's  intent is to apply                                                                    
          to  services rendered  during  emergency care.  We                                                                    
          also  agree  with  their  concern  that  the  bill                                                                    
          actually  reaches   far  beyond   those  services.                                                                    
          Separate  from  emergency services  and  emergency                                                                    
          medical  conditions, the  bill's  terms extend  to                                                                    
          any  non-network provider  who provides  "services                                                                    
          at an  in-network hospital or  ambulatory surgical                                                                    
          center."  That   would  apply  to   literally  any                                                                    
          service provided by  an out-of-network provider at                                                                    
          an in-network facility ...  for example a surgical                                                                    
          service of any kind.                                                                                                  
        • This will result in a prohibition of balance                                                                          
          billing far  broader than  intended and  will also                                                                    
          mandate  the   higher  in-network   benefit  level                                                                    
          required  under the  bill even  for consumers  who                                                                    
          choose  to  see   an  out-of-network  provider.  A                                                                    
          prohibition on balance  or surprise billing should                                                                    
          protect  consumers  who  are unable  to  choose  a                                                                    
          network provider and not those  who are free to do                                                                    
        • To resolve this, we suggest that "in-network                                                                          
          hospital"  and   "in-network  ambulatory  surgical                                                                    
          center"  be linked  only  to "emergency  services"                                                                    
          and  the   treatment  of  an   "emergency  medical                                                                    
          condition" to  resolve any ambiguity on  the reach                                                                    
          of the bill.                                                                                                          
        • The bill also provides balance billing protection                                                                     
          to any  patient who  has not consented  in writing                                                                    
          to balance billing when being  referred to an out-                                                                    
          of-network provider. Insurers have  no way to know                                                                    
          whether or not a  referring physician was involved                                                                    
          at  some point,  or  whether a  patient agreed  in                                                                    
          writing  to  be  responsible  for  the  additional                                                                    
          costs of out-of-network care.                                                                                         
          As  a  result,  paying  that  claim  correctly  is                                                                    
          difficult  if not  impossible.  It  would also  be                                                                    
          exceedingly rare for a referral  to be involved in                                                                    
          emergency care.                                                                                                       
        • Finally, the bill in any form will require                                                                            
          changes  to  claims  systems,  changes  to  member                                                                    
          benefit  structures  and  a range  of  member  and                                                                    
          other  communications.  In addition,  product  and                                                                    
          rate filings for 2019  will commence very shortly.                                                                    
          In   order  to   ensure  that   implementation  is                                                                    
          thorough, and that the impacts  of the bill to all                                                                    
          of these processes is  well understood, we request                                                                    
          an effective date of plans  filed or renewed on or                                                                    
          after January 1, 2019.                                                                                                
        • Thank you. I would be happy to respond to any                                                                         
          questions you might have.                                                                                             
3:41:36 PM                                                                                                                    
REPRESENTATIVE WOOL  said he  has heard that  his doctor  may not                                                               
know whether  he is in-network  or out-of-network.  He  asked for                                                               
an explanation of the terms.                                                                                                    
MR. SORRIN answered that typically  a provider with Premera would                                                               
be  in  all  of Premera's  networks.      He  said it  should  be                                                               
relatively straightforward.                                                                                                     
REPRESENTATIVE WOOL  asked whether  a health care  provider could                                                               
be in more than one network.                                                                                                    
MR. SORRIN  answered in the  affirmative.  He said  providers are                                                               
free to join any network.                                                                                                       
3:43:53 PM                                                                                                                    
REPRESENTATIVE   SULLIVAN-LEONARD   spoke   to   testimony   from                                                               
emergency room doctors.  She asked  whether they are able to join                                                               
the network with Premera.                                                                                                       
MR.  SORRIN  answered  that  Premera would  love  to  have  every                                                               
hospital-based  provider  in  its  network.  Sometimes  it's  not                                                               
possible as the  contracting dynamic is complicated.   He said at                                                               
times  hospitals  contract  separately with  some  providers.  He                                                               
underlined that Premera  tries hard to enter  into contracts with                                                               
the provider types.   He added that if the  consumer doesn't have                                                               
a choice, it  can result in the type of  balance billing that the                                                               
proposed bill is trying to prevent.                                                                                             
REPRESENTATIVE  SULLIVAN-LEONARD  asked  whether Mr.  Sorrin  has                                                               
spoken with the bill sponsor about an amendment.                                                                                
MR. SORRIN answered he had spoken  with the sponsor but not about                                                               
the issue  of emergency care.   He said he thought  the intention                                                               
is to  address emergency  care.   He added he  would be  happy to                                                               
work with the sponsor.                                                                                                          
3:46:48 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON surmised  the  insurance company  would                                                               
not be happy with the legislation for a series of other reasons.                                                                
MR. SORRIN  addressed some  of the  concerns with  the bill.   He                                                               
said the use of the 80   percentile would lead to a higher number                                                               
of  out-of-network  hospital-based  providers.   He  provided  an                                                               
anecdote from the state of Washington's market.                                                                                 
3:48:59 PM                                                                                                                    
REPRESENTATIVE KNOPP asked  what leads the company  to enter into                                                               
a contract with higher rates.                                                                                                   
MR. SORRIN answered  some of the high  levels involve specialties                                                               
that have very few providers.   He said the higher available out-                                                               
of-network   reimbursement  raises   the   level  of   in-network                                                               
REPRESENTATIVE  KNOPP  stated  he  doesn't  believe  any  of  the                                                               
hospitals  in his  area are  in  a network.   He  asked why  some                                                               
decide not to participate.                                                                                                      
MR. SORRIN  answered his  organization attempts  to have  as many                                                               
hospitals as  it can.   He stated  that in Washington  around 100                                                               
out of 105 hospitals are in the network.                                                                                        
REPRESENTATIVE  KNOPP  asked  what determines  whether  providers                                                               
enter the network.                                                                                                              
MR.  SORRIN  answered  that  Premera works  hard  to  enter  into                                                               
contracts with hospitals in less densely populated areas.                                                                       
3:52:28 PM                                                                                                                    
REPRESENTATIVE BIRCH  asked whether  there is objection  from the                                                               
company to  paying an in-network rate  for a customer who  has an                                                               
emergency out-of-network procedure.                                                                                             
MR. SORRIN answered the company does pay in those situations.                                                                   
CHAIR KITO clarified  the issue is paying the  amount between the                                                               
in-network rate and out-of-network rate.                                                                                        
3:54:16 PM                                                                                                                    
REPRESENTATIVE WOOL  asked for clarification  regarding hospitals                                                               
versus doctors being in-network.                                                                                                
MR. SORRIN answered that the  company contracts with the hospital                                                               
and  some  hospital-based  providers  are  not  employed  by  the                                                               
hospital.   They  may not  have a  plan that  contracts with  the                                                               
REPRESENTATIVE WOOL  asked whether, if the  proposed bill passes,                                                               
the provider would take a loss on the billing.                                                                                  
MR.  SORRIN answered  the provider  would get  whatever rate  the                                                               
proposed  bill  may  end  up  providing.    He  added  there  are                                                               
different  rates across  the  networks. He  said  that under  the                                                               
proposed  bill,  all  of  the  providers  seen  in  an  emergency                                                               
situation  would  be   subject  to  whatever  rate   the  HB  193                                                               
3:57:32 PM                                                                                                                    
DR. SAMI  ALI, Alaska Emergency Medical  Associates, testified in                                                               
support  of HB  193.     She  described  her  organization.   She                                                               
corrected that physicians are not  employees of the hospital, but                                                               
contract with the hospital.                                                                                                     
4:00:07 PM                                                                                                                    
REPRESENTATIVE  WOOL  asked  whether  Dr. Ali  agrees  that  some                                                               
providers could leave the network.                                                                                              
DR. ALI answered  that it is hard  to say, but that  some may get                                                               
out of their contracts.                                                                                                         
4:00:46 PM                                                                                                                    
RHONDA  PROWELL-KITTER,   President,  Alaskans   for  Sustainable                                                               
Healthcare  Costs, testified  in  the  hearing on  HB  193.   She                                                               
stated some concerns  with the proposed bill.  She  said that one                                                               
requirement of  the proposed  bill would  be that  the in-network                                                               
provider should inform the patient  when another provider is out-                                                               
of-network.   She  queried why  an in-network  provider would  be                                                               
responsible for tracking another  provider's network status.  She                                                               
said that  the current version  of the bill requires  the highest                                                               
of three  calculations.  She  said mandating the  use of the  80                                                                
percentile would allow  out-of-network providers to be  paid at a                                                               
higher rate than in-network providers.  She mentioned Oregon bill                                                               
HB 2339.   She warned against unintended  consequences that allow                                                               
out-of-network   providers   to   be  billed   above   in-network                                                               
4:04:58 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON asked for the Oregon law details.                                                                      
MS. PROWELL-KITTER answered the bill  was HB 2339 which went into                                                               
effect on 1 March 2018.                                                                                                         
4:05:19 PM                                                                                                                    
REPRESENTATIVE WOOL  suggested she  was saying  that if  a doctor                                                               
who is  out-of-network is  reimbursed at the  80   percentile, it                                                               
could be  more than  that reimbursed  to an  in-network provider.                                                               
He suggested this could be an  incentive for doctors to leave the                                                               
MS. PROWELL-KITTER answered that is her understanding.                                                                          
4:05:53 PM                                                                                                                    
CHAIR KITO closed public testimony on HB 193.                                                                                   
4:06:34 PM                                                                                                                    
REPRESENTATIVE   WOOL  asked   whether  the   administration  had                                                               
reviewed similar legislation in other states.                                                                                   
4:07:01 PM                                                                                                                    
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce,  Community  &  Economic Development  (DCCED),  answered                                                               
questions  in  the hearing  on  HB  193.    She answered  in  the                                                               
affirmative.  She  said the 80   percentile issue is  one part of                                                               
the governor's bi-partisan approach to the health care issue.                                                                   
REPRESENTATIVE WOOL  asked whether the  80  percentile  is common                                                               
in other states.                                                                                                                
MS. WING-HEIER answered  that Alaska is probably the  first.  She                                                               
added that the  Institute of Social and  Economic Research (ISER)                                                               
is currently conducting a study on the 80 percentile.                                                                           
4:08:14 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  stated he  appreciates the goals  of HB
193.   He said it  seems there is  a game of  "whack-a-mole" with                                                               
issues popping up.                                                                                                              
MS. WING-HEIER answered this is a  complex problem.  She said the                                                               
whole health care system in the state will take time.                                                                           
4:11:01 PM                                                                                                                    
REPRESENTATIVE KNOPP asked whether  any benefit has been observed                                                               
in  the Anchorage,  Alaska, legislation  to  mandate health  care                                                               
cost transparency.                                                                                                              
MS. WING-HEIER  answered that  no benefit had  been seen  as yet,                                                               
but  the mandate  was very  recent.   She corrected  that Central                                                               
Peninsula is in the Premera network.                                                                                            
4:11:51 PM                                                                                                                    
REPRESENTATIVE  BIRCH asked  about  the financial  impact to  the                                                               
MS. WING-HEIER answered the division  wouldn't have a fiscal note                                                               
(FN)  for  the  proposed  bill.     She  added  the  Division  of                                                               
Retirement  and Benefits  is  not  required to  pay  at the  80th                                                               
4:13:20 PM                                                                                                                    
REPRESENTATIVE WOOL asked  whether the motivation is  to give the                                                               
patient a better medical bill at the end of a day.                                                                              
4:14:14 PM                                                                                                                    
ANNE  ZINK, Mat-Su  Regional Medical  Director, Alaska  Emergency                                                               
Physicians,  answered  the  goal  is  to  prevent  out-of-network                                                               
billing.   She  reiterated most  providers in  the state  are in-                                                               
network.  She  added she did not think providers  would leave the                                                               
network.  She spoke to the situation in Washington and Oregon.                                                                  
REPRESENTATIVE JOSEPHSON  opined the  state needs a  single payer                                                               
REPRESENTATIVE  WOOL  suggested  if   someone  is  an  in-network                                                               
provider they would  likely be reimbursed at the 80   percentile,                                                               
so there would be no migration to out-of-network.                                                                               
DR.  ZINK  answered  that  is  correct.    She   stated  the  80                                                                
percentile has been in place since 2004.   She said the aim is to                                                               
avoid balance billing on top of that.                                                                                           
4:18:11 PM                                                                                                                    
CHAIR KITO commented that balance billing  has been an issue.  He                                                               
mentioned individuals  or families  that have to  file bankruptcy                                                               
due to balance  bills.   He  said at some point there  may be the                                                               
need for  a task force  for the state to  work on the  issue, but                                                               
there is no reason not to attempt to work on it.                                                                                
4:20:28 PM                                                                                                                    
REPRESENTATIVE WOOL  commented that the system  is so complicated                                                               
that  he does  not know  what  the effect  would be  of moving  a                                                               
single piece.                                                                                                                   
4:21:44 PM                                                                                                                    
The committee took an at-ease from 4:21 p.m. to 4:26 p.m.                                                                       
4:26:28 PM                                                                                                                    
CHAIR KITO held over HB 193.                                                                                                    

Document Name Date/Time Subjects
HB193 Opposition Letters 4.16.18.pdf HL&C 4/15/2018 10:00:00 AM
HB 193
HB 193 Followup HL&C Letter 4.19.18.pdf HL&C 4/15/2018 10:00:00 AM
HB 193