Legislature(2017 - 2018)BARNES 124
04/15/2018 10:00 AM LABOR & COMMERCE
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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 Committee. • For the record, I am Len Sorrin with Premera Blue Cross Blue Shield of Alaska. • I am here today testifying with concerns on HB 193 • 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 struggling. • 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 mandated. • 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 further. 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 expenses 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 costs. • 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 schedule. • 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 methodology. • 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 so. • 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 th 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 reimbursement. 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 hospital. 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 establishes. 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 th 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 providers. 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 th 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 network. 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 th affirmative. She said the 80 percentile issue is one part of the governor's bi-partisan approach to the health care issue. th 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) th 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 state. 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 percentile. 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 system. REPRESENTATIVE WOOL suggested if someone is an in-network th provider they would likely be reimbursed at the 80 percentile, so there would be no migration to out-of-network. th 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.
|HB193 Opposition Letters 4.16.18.pdf||
HL&C 4/15/2018 10:00:00 AM
|HB 193 Followup HL&C Letter 4.19.18.pdf||
HL&C 4/15/2018 10:00:00 AM