Like to call this meeting in the Senate Labor and Commerce Committee to order the time is 1 33 p.m
We are in belts room 105 of the Thomas Stewart building in The nation's most beautiful capital city of June, Alaska
Today is Friday
January 30th
Members present are
Senator Dunbar senator gray Jackson senator yand myself senator gorkman
I believe senator America will be joining us momentarily
via
the phone or team's web.
The record reflect that we have a quorum
to conduct business.
Welcome everyone to Senate Labor and Commerce.
I'd like to extend an especially warm welcome
to our recording secretary, Carrie Tupoe,
and our LAO moderator, Renzo Moises.
We have three items on our agenda today,
so we will move at a brisk but business-like pace.
First up, we had HP 78 Retirement Systems
Defined Benefit Option.
Followed by that will be Senate bill 121 health insurance allowable charges and rounding out our lineup today is Senate
Bill 163 repeal certain inactive funds slash accounts
First up we have house bill 78 retirement systems to find benefit option
We first heard this bill on Friday January 23rd when we had a presentation of the bill we
Had following meetings the next two committee days where we adopted a committee substitute took invited in public testimony
Today is my intention to have any committee discussion that members would like to engage in and then look to the will of the committee on the bill
Today we have the honorable representative Chuck cop with us here for questions and his trusty staff of Julia O'Connor
Are there any questions for representative cop or misele connor?
Hearing and seeing none, is there any further committee discussion or comments on House Bill 78?
Senator Young.
Thank you through the chair. So just wanted to put back on record that
There's I'd mentioned this quite a bit last week and so I'll be brief today, but I
Did like that the bill had the option to be you could be in the DB or the DC plan
I liked that there was five years there that somebody could choose
We have a lot of people move to Alaska.
Sometimes not planning to stay for the rest of their life.
They come up here and fall in love with the place.
And so the type of the people we're
trying to attract are typically very talented.
We're looking high level individuals
that have good resume and could benefit the state
in many ways, whether they're an engineer or an attorney
or whatever it may be.
And I do wish that that had been left in there,
and I just want to put that on the record.
Yeah, that's all. Thank you, sir.
Thank You senator. Yunt any additional comments by committee members
Hearing and seeing none
Senator Grey Jackson may have a motion, please
Mr. Chairman, I am eagerly moved to report House bill 78 version 34 l s 0 4 9 3
Backslaff golf from committee with individual recommendations any task physical. No, thank you mr. chairman. Is there an objection?
Hearing and seeing none, CS4HP78 version 34-LS0493
g as in Gallivan.
It is reported from committee with individual recommendations and attached fiscal note.
We'll take a brief at ease while we sign the paperwork and set up for the next bill.
We're back on the record now, it is 1.39 PM, still in the same place, but we're moving on to our next item, Senate Bill 121.
We have here to present the bill, the Honorable Senator Kathy Giesle, as well as her staff, Ms. Jane Conway.
Thank you for joining us in Senate Labor and Commerce.
Thank You Mr. Chairman.
District E, which is the Anchorage Hill Side Down to Whittier.
Today I am speaking to you about Senate Bill 121.
Thank you for hearing the bill.
This bill is about health care, access and affordability.
Health care is a big topic, this session, and this is
a piece of that.
I've been chasing this Greece pig since 2018.
trying to set a minimum reimbursement for clinicians.
Last session you heard this particular bill, Senate Bill 121,
which requires an reimbursement rate for out-of-network
providers to be at a certain amount of money.
So just for reminder, and mainly possibly for the public,
out of network means that a clinician has not
contracted with an insurance company, Primera, Etna, whoever, to provide services for those
insured people. So let's take EtNA, for example, if you have EtN Insurance, that insurance
company negotiates with clinicians on how much they'll pay the clinician for certain
services. And those services are defined by codes that the clinicians uses when they
People who are not in that network can charge whatever they want, but the insurance company is
It is not committed necessarily to to paying that them that amount
but this bill would set that about and
Provide a negotiation point for clinicians who aren't in network
So in other words if Jane is a clinic and I'm a Clinic
I decide to be a network for Primera.
So Primerra is going to send me their insured patients.
Jane on the other hand says, no, I'm going
to go on my own.
So the patient sees Jane, and maybe Jane
charges $500 for a visit.
I've contracted with the insurance company
to provide that very same service.
Perhaps it's an average visit, not particularly complicated.
And I have negotiated with The Insurer.
to be paid $400 for that visit.
She's charging $500, I'm charging 400.
The insurance company, with what we're providing here,
we are setting that amount.
She is, she will be reimbursed at that $ 500.
Let's just say that's the, what the bill says,
that she would be reimburseing at the $50.
When I negotiate with the insurance companies,
I know what they're setting her reimbursement out, and so I can say, look, I'll do this for 450 or 400.
I could negotiate, but if there's no set fee that out-of-state clinicians can be reimbursed for, or out of network, thank you, then I have nothing to negotiate.
$50 for that visit.
So what we're trying to do here is set a standard for reimbursement, for clinicians
who are outside of network, but it provides a negotiating point for folks that decide
to contract with that insurance company on what they'll be paid.
It's a negotiation tool.
So this bill had that in it.
We still had something called the 75th percentile in
it, the state used to have an 80th percent rule.
And we also had a separate bill that had
a requirement for network adequacy.
So that meant that, again, let's take
those people who are buying their insurance
with a diverse enough group of providers
that they had some choice.
So maybe Jane is a physician, a family practice physician.
I'm a nurse practitioner.
The insurance company can't say,
I am just gonna have Jane.
If you have our insurance, you can only see Jane and be covered by our
insurance. If they come to see me, they'll have to pay out a pocket and then bill
insurance themselves or whatever. So that was what the network adequacy piece of
it was. We've taken those two pieces after discussion during interim and we've
created a CS that is before you,
that Jane is going to explain that CS.
It combines these two concepts
and deletes some other aspects of it, simplifying it.
So if it's all right with you Mr. Chairman,
Jane could take you through an explanation of changes.
Okay, so before we do that,
are there any questions from committee members
about the concepts that are just explained by?
the member from the hillside and self-engage.
Seeing hearing none, for just the quarter of course here in business,
we will put the CS on the table.
So members having their packet of draft proposed CS, may I have a motion, please?
Certainly, Mr. Chairman.
Mr Chairman, I move CS for Senate Bill 121, version 34 LS 0282,
backslash golf as the working document.
Thank you, Mister Chairman
I'll object for purposes of explanation, Ms. Conway.
Good afternoon.
My name is Jane Conway, I am staff to Senator Kathy Giesle.
And I'd be happy to go over the changes from the version I that you had before you last session.
I think April or May, to the new CS, which is version G.
2107-035 that outlines the minimum provider network standards to the bill.
The network adequacy language that Senator Geesele referenced from a different bill last year, Senate Bill 122.
Then section two is really just formally section one from version I.
So, in that section, now with section two, that outlines the standards for settlement
of health insurance claims.
That section is amended by removing the verbiage from subsection A pertaining to the 75th percentile.
So we removed that part of the section when we changed to version G.
Subsection A still contains the language for the 450% of the CMS fee schedule for Medicare.
In other words, the floor reimbursement and that remains in the bill as an allowable charge.
Following that section in subsections B, C, and D, they are all the same from version I to G, so those have not changed.
of some language that is no longer needed because of the addition
of network adequacy language
that's now covered in the bill.
So, repeal 2107 0203 is not needed anymore.
Section 4 is the same transition language
that was formerly section 3 in version I.
That's the language now inversion G.
And then section five is just the effective date.
And we've up to, of course, another year
because another of year is passing.
And those are the changes from version I to G.
Thank you very much.
Are there any objections, questions?
Send or yon?
health insurance is a very complicated issue, right? And so
handled with delicacy, it's, and it is probably something that
won't always be looking at no matter how good we make things
probably always the time to make it better, Right? So can you
just please for everyone listening? For us, just give it,
you know, your explanation of how this is just going to
make thing better for the consumer and help keys cost down
but help keep the market stable too, you
know?
So
Access is a challenge in Alaska, and we actually have invited testimony, clinicians who practice today here in
Alaska and actually one who has had to leave Alaska because the reimbursement has fallen so much with the removal of the
is set that minimum reimbursement rate for out-of-network providers which allows
those who are in network to have a negotiation arm, okay? They can go to the
table and say, I'm gonna arm wrestle you on this because I know you're paying her
450 percent of Medicare. I'll do the same work for 400 percent
only 350 percent, whatever, but it gives them a bargaining point. Right now there's no bargaining
point and that's best explained by our invited testimony. They can tell you that instead of
having that bargaining
point
The reimbursements have fallen significantly.
The contracts have been canceled in many cases
that providers had with insurance companies.
And they're now providing, they are now reimbursing
at about 185% of Medicare for the same services
that they used to be paid significantly more.
So it means that clinics are folding, clinicians are leaving.
I'll let the invited testimony talk about that.
So that's what we're trying to fix here,
is to keep our clinicians here at a reimbursement rate
that they can afford to,
afford keep their clinic open.
The access part also includes the network adequacy.
So this would prevent insurance companies
from saying in this town there's the hospital
you can go to for outpatient surgery
or there is a surgery center.
Insurance companies could say, wait a second,
we're only gonna cover the services at the hospital.
But network adequacy would require them
to have multiple choices for people.
So people might say actually,
I'd rather go over here to the surgery center,
it's easier to get in and out of the building,
it is quality care, whatever.
But providing that diversity of clinicians.
So again, helping access.
So that's...
What the bill is, you know, the network adequacy, I know it sounds new.
It's actually something that there's a model legislation from the National Association of Insurance Commissioners,
which I believe Mr. Chairman,
you've attended some of their conferences.
38% of other states have a network advocacy requirement.
So that's how these go hand in hand to create a viable business environment for our clinicians.
They're trying to run a business, as well as serve Alaskans.
Thank you.
Thank very much, Senator.
We will move now.
Oh, any further objection to the CS?
Hearing and seeing none, CS4 Senate Bill 121, version 34, LAS, 0822,
backslash G as in Galena is adopted as a working document.
We'll go now to your invited testifiers.
First up we have via the team's web, Mr. Jeff Davis.
Mr Davis, please state your name and affiliation
and begin your testimony.
Thank you, Chairman Bjorkman and Senator Great Jackson,
Senator Dunbar, Senator Young,
for the chance to speak with you today.
My name is Jeffrey Davis and I'm the owner
and principal of Western Group Consulting, LLC.
here representing the Alaska State Medical Association
and hopefully the larger medical community with my views.
I'm quite familiar with these issues
because I have 40 years of experience
in healthcare and health insurance in Alaska.
And 18 of that why I was President of Primera
will cross Blue Shield, Alaska
And during my tenure with Ramirez, I had many discussions with the Division of Insurance
about how to improve the 80th percentile regulation.
We wanted to prove it, but we never suggested repeal without replacement, which is what
happened.
because there were benefits from the regulation.
I'm being familiar with this.
I could talk with you for an hour, but I won't.
I've tried to pair my comments down to as short as I
could,
but please ask questions if any of this doesn't make sense or if I
left out something that is important to you as you think about these matters.
Senate Bill 121 is a consumer protection bill that replaces the protections that were in
place for 20 years under the repeal 80th percentile regulation, plus, as Senator Geisel explained,
proactively preventing access issues when narrow network products are eventually introduced
in Alaska.
Specifically, Senate Bill 121 does two main things and ensures Alaskans get the health
insurance benefits they paid for and it helps protect access to positions and other providers.
So how does this bill ensure people get benefits that they pay for?
As Senator explained, insurers don't automatically pay based on the provider's charges.
And under the repealed regulation, there was a state-defined rule that was in place that
would determine what was reasonable. But after a repeal, the insurers were allowed to decide
what is reasonable, and the largest shows a standard which is about half of what
was placed under regulation. So in most cases, this means the insurer now pays much less than
The value of the policy they bought is decreased.
The consumer is not getting what they paid for.
Senate Bill 121 re-established as a state determined rule
for deciding what is reasonable charge
and that protects the consumer.
So how does this bill protect access to providers?
Well, there are three ways it does that.
First, if a patient chooses a non-contractor provider, the insurance payment would be based
on what's reasonable in Alaska, not what has been deemed to be reasonable based on some
other lower cost location, and that supports the patient's ability to choose the provider
they think is going to do best for them.
And second, this bill supports fair payment providers, as you've just heard from Senator
Giesle, by establishing what is reasonable, based in the charges in Alaskan,
not an arbitrary fee schedule.
And why does that matter? Well, fair payment is needed to keep physicians and other providers
in Alaska. Many Alaska providers, as you'll hear today, are in financial trouble and in danger of
closing their practices. And there are a number of reasons for that. But here are just a few.
Insurance contract rates have been flat or gone down over the last few years. I shared a chart
same time Medicare rates are down by approximately 33% and Medicaid rates, which used to be much
higher than Medicare are now equal to Medicare, so they've come down as well. And the portion
of Medicare and Medicare recipients in the population has grown as a percentage of the
population. So in face of declining or flat revenue sources,
It, to make the problem worse, the cost of support staff is up 47% in the last 10 years,
according to a study published last year by the Hospital Association.
So the result of all this is the take home pay for physicians in Alaska is amongst the lowest
in The Nation. In fact, for family practice, it is The lowest based on a medical group management
association survey from 2024, based upon 200,000 responses, and the practices are struggling.
and they're unable to recruit to replace providers into this sort of an environment
who will retire or who leave.
This bill also promotes fair payment by bringing more balance to contract negotiations, as
Senator Geese will explain.
Before repeal, insurers would not agree to contact increases.
They knew they had the upper hand, even before repeal.
But after repeal with increased bargaining power, now that the alternative to staying
They began demanding steep increases, such as some of its steepest 28%.
So you have flatter declining revenue, you
have skyrocketing expenses, and now you're being told that you need to deliver a
huge decrease over what you had been getting. In other words, repeal without
replacement. We can provide us negotiating power and they were
And third, this bill, as you heard, proactively sets minimum network standards before narrow
networks come into Alaska.
The provisions in the bill apply to narrow network products, and narrow networks is one
that provides little or no payment for out-of-the-network providers.
So that's the example Senator Giesle was giving.
I'm sure a person must go to that provider, or they receive no benefit at all,
or very little benefit. And since Alaska is starting at a place where the entire state
is a federally designated healthcare professional shortage area to go from an already inadequate
would just make the situation worse and means patient choice could be severely impacted
and access impacted.
And insurers use narrow networks to drive down contract rates by pitting groups against
each other.
Group A, hey, you give us this rate, your in, and we'll keep Group B out or vice versa,
which then also makes the correct situation worst.
As Senator Geisel stated, the National Association of Insurance Commissioners has stated that
as model legislation that has been adopted by 38 of the 50 states and territories, each
and they have stated their Committee on Health Care and Health Benefits has stated that network
minimums are amongst the most important things a state can do to preserve a well-functioning
health care and a health insurance market. They're very important. The minimum standards proposed
in Senate Bill 121 are different than in the other 38 states because they reflect the unique
geography and distribution of people and providers in Alaska and as mentioned the already fragile
So, action is needed now as at least one of the major insurers has stated that they
desire to bring narrow network products to Alaska.
So in summary, Senate Bill 121 does need to predict consumers' pocketbooks and access
to needed healthcare.
I thank you, committee members, and Chair Bjorkman for your time and attention and I'd be happy
to take any questions you might have.
Thank you very much, Mr. Davis.
Are there any question from committee member?
Senator Dunbar Thank You mr. Chair. Thank you again mister Davis, and I know we've heard this bill
I had a chance to hear this poem health the health committee as well
I think so we have heard a number of times but it has been and weve been gone for six seven months and
This is a combined bill now could you describe a little bit?
How the enforcement of the rules regarding narrow network would work?
Yes, I'd be happy to, through the Chair, Senator Dunbar.
The way the enforcement would work would be carried out by the Division of Insurance
when a carrier filed a product, their filed their narrow network products, they would
have to demonstrate at that point in time to the division of insurance that they were
meeting the standards in each of the minimum standards and each the regions.
If they were not able to meet them,
there's provisions in the bill for a phase in period
to be allowed by the director of the division,
as also our provisions that the Director
could make exceptions if there were reasons
that they ensure it could not meet the standards
for at least for the period of time,
make exception to that rule.
These kinds of bills have worked elsewhere, and I think it's worth reiterating, you know, in a normal functioning market,
companies can just bring a product to market and start selling it, but this is a highly regulated market.
And so it is, am I right in saying that the insurers already have to go to the Department of Insurance and have some sort of approval before they bring the product into market?
Yes, through the chair, Senator Dunbar. Yes. That is correct that insurers need to file and they products need
to be approved before they're able to use them in Alaska for insured regulated products.
And follow Mr. Chair? Yes
And I'm sorry, that was a two part question. The earlier part was, how have efforts like this worked in other states?
Or is the enforcement mechanism here similar to how it's been set up in
through the chairs that are done by I am not familiar with all of them but my
understanding is that the enforcement mechanisms are very similar here this
is in line with what is the model legislation developed by the National
Association Insurance Commissioners
And most of the 38 states that have, 30 states and territories that
have these standards have followed fairly closely the model legislation with the exception of how
minimums are defined. That's very different. Now it's
very in different in a densely urban place like Massachusetts and it would be in Alaska.
So each state has adopted their own flavor for the definition of minimum.
Thank you. Thank You, Mr. Chair.
Thank very much other questions for mr. Davis
Mr.. Davis I have a couple of questions
if providers are
Guaranteed to be paid at a set price point whether that is as pegged as it used to
be under the old regime of
percentile of usual and customary charges
or a new regime under this system where it would be some
multiplier of Medicare, what incentive is there for providers
to be in network, to sign contracts with insurance companies
when they would guaranteed to pay it out at some multiplier
of the Medicare if they are out of network?
Please have a chance to answer that.
There are a number of benefits to being an in-network provider.
The one is that in most contracts,
the insurer pays a higher percentage of whatever is
found to be the reasonable and customary amount,
and they would to a non-contract provide.
oftentimes is 80% if they're contracted and 60%
if not. What that means to the provider right off the bat
is that they need to chase their, that's probably not a good
term, they require their patients to pay 40%
of the bill rather than 20% of
the Bill and it's easier to collect from
the health insurance company, although it is not easy,
that's one reason. Another thing that is very important is back in the day, in 2014 and before,
when very few providers were in network, there wasn't a cost to being out of network in terms of
attracting patients and this financial differential that I just explained.
But once all the providers moved in, and I say all,
in quotes, air quotes.
It's estimated about 90% are in network.
At that point in time, leaving a network is very costly
to a practice.
You first have to explain to your patients why you're leaving
and why now they're going to have
to pay a higher percentage of the bill
and how it's going be more complicated for them.
Doesn't make them very happy with their provider.
insurers have other disincentives that they have built in. For example, contractor providers
may have a designated, at least they're used to, a designated person that
they could work with when they had issues, and if you're non-contract, good luck. You can email
this email address and we'll maybe get back to you. And if
you are the one in a specialty that is dropped out or is not in, it's a very
I could, I won't name names, but there was a very popular family practice physician in
Anchorage who was removed from one of the major carriers networks with little explanation
and it has been devastating to her practice in terms of loss of patients and loss
of revenue.
the standard in the bill becomes the reference point for a negotiation, but providers are very
willing in most part to agree to something less because they get something for being in network,
the things that I just explained. There are other little things. They're in
the directory, so someone goes to look for the provider. But it's a variety of things,
There's been some concern expressed.
Well, gee, if we have a standard and people are being
reimbursed as something less than a
standard, they'll just drop their contract and go out of
network and for the standard.
And I, based on my experience, I don't believe that that's true.
There may always exceptions to the rule, but I believe the vast
majority of providers would continue to see their advantage
to be a network if they can negotiate something reasonably
to the standard in the bill.
There might be some catch up that has to be done
because of the situation I described earlier
where there have been virtually no increases
for the last seven to eight years
while expenses have gone up.
Understood.
As you look at the matter of course,
over the lifespan of 80th percentile rule,
there was a time
where you had a large amount, an overwhelming percentage,
I would think it's safe to say,
of some specialties and providers that were out of network.
And then there was a migration of people
who came in network under the same regime.
What was the cause for that, that action?
Why did we change from so many people
being out-of-network to so-many people being in- network?
Sure, but again, an excellent question.
I'll get my best.
That would be a great research project for someone.
But I will give you the world according to Jeff Davis
why I think that happened.
During the period between 2004 and 2014,
a significant number of providers moved into Alaska.
numbers, increasing the number in certain specialties and bringing new
specialities that were not been there before. And I believe that one of the
major reasons for the influx of providers is the 80th percentile
regulation stabilized the financial situation. Prior to the 8th
percentile, we had exactly what we have now with with insurers paying
whatever they wanted to. So to move your practice into an environment where
you don't know what you're going to get paid.
was not a very wise financial decision, and you were likely not to make it.
After 2004, that changed. We saw, I think it was about 40% increase in the number of
physician offices in Alaska. Well, the more you have of a certain of in an
in an environment, the greater the benefit becomes
of differentiating yourselves by joining a network.
That's one factor that I think happened.
Another thing that happened was around.
I think it was around 2012.
The healthcare commission that was in place at that time,
commissioned a study from Milliman
that looked at relative compensation for physicians
by specialty in Alaska versus other comparison markets.
And what it found was a lot of discrepancy
that a number of specialties especially
were being paid significantly more in Alaskan than elsewhere.
It didn't look at cost, it didn' look
and take home income, it just looked at charges.
But that, I think, raised awareness
that it was important for the medical community
to respond to that.
And part of the response was to,
okay, we'll be part
of a game now, will come in to network.
And so they did, and it happened fairly quickly.
And once the way this works in the market
is once a few people move in,
then there's kind of
a snowball effect and others move
Nobody comes in. It can stay that way for a long time, which it did in Alaska.
But then once that changes, it's go time.
And I think center, that's also what we experienced here.
So in my view, having been around since before there were any
been network products in Alaskan, those are the major factors that I'm aware of that.
I mean, influence the growth of providers in the network.
going backwards with this bill and all as I explained to your earlier question. Thank you.
Thank You last question someone who's out of network. Is there anything that would stop them
from charging even more than the that proposed benchmark of 450% of Medicare
Senator Bjorkman, another excellent question, there is nothing.
They can charge whatever they want to charge if they're out of network.
But the payment to on behalf of the insured person is going to be driven by the standard
The provider could then balance bill for anything over that if they're a non-network provider.
That is not a very popular practice from the standpoint of people who are insured.
So I think that, if there's any other options that would be short-lived, but that
would possible.
Now within a contract, there is no balance billing.
the contract sets the rate and all the contracts that I've ever seen require
that the provider accept that rate as payment in full whether part of it comes
from the insured and part comes from
the insurer. Yep, as a person who has two balance bills on my desk that
I need to write checks for your assessment is correct, sir. Any further comments
We'll go to our next invited test fire.
Thank you very much. I appreciate your time.
Hello. Hello, can you guys hear? We can.
Please state your name and affiliation and begin your testimony, please.
My name is Carolyn Renee Brooks.
So, brother, Sam, and my name are Gus.
What, what, who, let's see.
How can I fix that?
Okay.
I think you're signed in twice, Dr. Chris.
How do I say now?
This one.
I don't think he just X out of it.
Or hit the little leave telephone up there.
There a speech
Now we need to back
Okay
Let's see if you can get me back we can hear you if we turn on your
That's good
So thank you for letting me speak today.
I'm here as a physician who's practiced in Alaska
for many years, actually 30.
Well, I've been practicing for 36 years.
I have been Alaska for 25.
I mean, love caring for my patients here.
And what I want to do is share with you what happened
when you guys got rid of the 80th percentile,
how it affected me, not in theory, but in real life.
Could you state your name one more time for the record,
please, ma'am?
Carolyn Renee Mercuris, thank you. Sure. So one of your doctors here in Anchorage, so
when the real stop being enforced, the impact for me was immediate. In the fall of 2024,
in the Fall, January's when it was stopped, my reimbursement dropped significantly,
even though I've seen the same number of patients and I was given the
Alaska's your nose expensive place to run a practice after pain, rent, malpractice, supplies,
and my employees and all my employers have families. I've found myself losing money
by simply staying open. About every three months, I was having to put my own money into my practice
just to keep it going. At the same time that the men for care didn't slow and the OB-GYN patients
they don't get put on pause. I have pregnancies, emergencies, complications, they keep coming.
They require time, attention, and constant availability. The financial strain of this,
combined with the emotional physical demands of what I had to do, became overwhelming. Not only did I
I want to keep working, but because the system no longer made it possible, I couldn't do
it sustainably.
Eventually, which was the early of this year, the difficult decision to retire earlier than
I had ever planned.
I mean, it's still the kid in college.
That decision wasn't just hard.
It also meant fewer options for my patients who are already struggling to find care.
Today, I still practice, but I do it as a locus.
Alaska lost a doctor, not because the need disappeared,
but because of math stopped working.
When we talk about reimbursement policies,
we're really talking about access to care
and whether physicians can stay and about whether communities
can depend on having the doctors that they need.
I hope that this story puts a human face on this issue
Real people on both sides of the exam room,
and the cost of that is worth acknowledging.
Thank you.
Thank You, Doctor.
We'll move next to our next,
are there any questions for you, Muma?
Seeing none, we'll
move for next invited testifier,
Teresa Lyons, Ms. Lyons.
And of course now I clicked in line like what am I supposed to say?
Thank you to Senator Baroqueman and members of the Senate Labor and Commerce Committee.
My name is Teresa Lyons. I'm an advanced practice registered nurse, an APRN.
I am here today as the president of The APRM Alliance, which is an umbrella organization
that's made up of four specialty areas of advanced-practice nursing.
There are 2,600 of us in the state, licensed in
the State and practicing in
the States, 2400 of
us are nurse practitioners.
We're serving in primary in
various different areas,
including we manage people with chronic disease
and we're in urgent cares.
Sorry, I'm reading the letter that Stephanie and I put
together here and
I don't want to miss anything.
we are in a variety of areas. I was asked also to speak because I also,
I'm a psychiatric nurse practitioner and I started my practice in 2012 and
I asked to tell my story. When the rescission of the 80th percentile came into the play,
it had a very, very significant impact on my small practice.
In Fairbanks, we wound up expanding into Kenai in 2021, and then two years ago we opened a practice in Anchorage.
I have 14 employees, six which are advanced practice nurses, all nationally certified.
In between the three sites in Alaska,
we see on average 200 people a week.
Over a year,
we have about 10,000 visits across all the state.
We serve people as young as three and our eldest is 98. We accept all kinds of varieties of
insurance. we are Medicaid and Medicare providers. 63 percent of our practice is Medicaid Medicare.
The rest of um our practices in the commercial insurance and like my colleagues the practice
finding both situations financially unstable, and we too were impacted in 2024, 2024 when
the insurance industry made the choices that they made.
In network at the time, our reimbursements weren't really great.
They're about 165 to 185 percent of Medicare, but at least we knew what we could kind of
figure out what to do with.
did not choose to go out of network,
but kind of got bumped out in network.
And then we actually chose to back into network
I just, I'm still pulling crow feathers out
of my teeth as I sign the contract
and we'll be back in Network with one of the larger
insurance companies at the end of February.
And we did it because our patients,
our clients, our families that we serve needed access
and watching them struggle and our staff struggling with
Well, we can't actually book you an appointment until you pay your account down has been really
brutal, but we are in business and to keep our lights on we have to figure out how we're going
to do that. We really applaud the work that's gone into SB 121 with the substitute that is being put
And on behalf of the APRN Alliance, we are in support of this.
It ensures that networks have minimum standards for providers,
including the inclusion of sufficient number of licensed healthcare providers
that provide primary care.
This ensures and identifies contracting regions of a stage
which will have full complement of providers and better access to care
Second, it ensures statistically credible method that will be used to determine allowable
charges with a floor of 450% and I did have to laugh.
Currently, there is no negotiation with insurance companies.
The contract is given to us and we either take it or we leave it.
Putting a Floor for out of network could give us some negotiating ability and ensure that
you know, actually negotiate a reasonable contract rate.
Sir, the bill ensures that there is an equity applied to the reimbursement rates for allowable
charges for health care providers who are practicing within their scope of practice
and their provider license. We thank you again for hearing this bill and the APR and Alliance
stands in full support to pass this Bill out of your committee and I am happy to answer any
Thank you very much nurse lions. Are there any questions from committee members?
Ma'am, I want to make sure I understood you quickly. Did you say that before the repeal of the 80th percentile regulation?
That your reimbursements were at about
165 percent of Medicare
Yeah, in contract. I'm sorry I shouldn't laugh out loud
My billing company had had encouraged me not to be in contract at that period of time
And I said, you know, I'm watching my clients really struggle. We'll go in contact. There's there's got to
Be some benefit here boy did I learn
That there is no negotiating and you take what they offer you and they will change we'd get letters and it's like now
We're gonna re-introduce your reimbursement. So,
You know
And our challenge in the kind of work that I do is not that we don't have enough clients,
we quite frankly donít have any of clinicians and trying to attract them and retain them
into Alaska is no small feat.
Thank you, ma'am.
We will go in any further questions.
Carl Boerick
Dr. Boarick, I hope I'm saying your last name correctly
That was pretty close it's actually bough Rick Bowerick that it was a 50-50 shot I had there. Sorry
Not bad, so I want to say thanks to senator diesel for
introducing this bill and
Mr. May was for explaining it so well
My name is Carl Ballerik. I'm an OBGYN and Fairbanks, and with me is Sarah Van Ork, my office manager.
I was born and raised in Fairbanks. He started Intular Women's Health Clinic in 2003.
Currently my wife and I employ a total of 20 Fairbank students, including seven practitioners,
including mid-levels and doctors.
and extensive receptionist, dollars, office manager, and chief financial officer.
Since the loss of 80% rule, we've seen a significant drop in reimbursement,
and I was hoping to slide the pictures to the bar graph where I delivered to y'all.
We have them, sir.
significant drop reimbursements are our bread and butter. We do on the order of
15 deliveries or obstetric related activities every week.
We depend on that to keep our clinic going. Those hysterectomies and bladder
And we just can't keep going on with the re-inversions that the insurance companies are now giving us.
We can see the change in the hospital-based building is approximately 20 percent decreased.
And the clinic- based procedures is about only 15 percent.
But in addition to those numbers, which are not good, the largest insurer in Alaska is
instituted a large reduction in reimbursement to middle office providers.
They're now only being 75% of these already low reimbursements for nurse practitioners
and about 80% for certified nurse midwives, even though they do exactly the same thing
Needless to say, the price, this decrease in reimbursement
is not being passed on to the consumers.
One kind of showing example is that some of the insurers
are not paying for things that we apply,
such as implants or injury on devices.
They're not paying us as much for those.
as they cause for us to buy.
So meanwhile, clinic expenses have gone up considerably.
The electricity, the water,
the cleaning, and the heating fuel,
the supplies, their rent, all of those are going out.
Our biggest expenses, staff, for instance,
receptions, salaries have gotten up over 20%
over the past five years.
The Senate Bill 121 is not a panacea.
It's not going to make things as good as they were before the loss on the 80% rule,
but it's going help a lot in terms of negotiations.
I have just a couple examples on that that passed on.
Well, I've got you guys up, but I address to you.
I know quite well retired last year because he was paying money to keep his.
clinical, but at least just one podiatrist in town.
John Lopez, the neurosurgeon, he's the only one at town,
and sometimes getting his little 30% reimbursement
for his highly technical and highly
detergious procedures and surgeries in the hospital.
The line I'm short of it is that I don't think health
cares, we know it can carry on under these circumstances.
So please, if there are questions for me or my office manager, Sarah, please let me know.
Dr. Boric, thank you very much for your testimony. Are there any questions
for the doctor? Seeing and hearing none, thanks again, sir. We'll move now to our final
Ms. Debbie Ryan, Ms Ryan please state your name and affiliation for the record and begin your testimony.
Thank you senator and members of the committee. My name is Debbie
Ryan and I am a co-owner of a chiropractic clinic with a 70-plus year legacy of serving Alaskans.
For transparency, I also serve as the CEO for Alaska Chiropractics Society representing chiropractor physicians statewide.
and working to protect patient access to conservative care.
In that role, I hear far too often
from providers who are retiring early,
leaving Alaska or unable to repay student loans,
which can be as much as $250,000 when they get out of school,
nor can they support their families
because they simply cannot make a living practicing
health care in this state anymore.
Nor are we attracting new younger providers to Alaska.
Today, I'm here to speak to you about how insurance affects healthcare, not only for
providers, but for patients.
When you look at the full picture, both sides of the healthcare equation are under serious
strain, and let me share a few facts from my office.
First, deductibles are extremely high.
only after that deductible is met.
For conservative care like chiropractic services,
this often means that the patients pay 100% out of pocket
despite paying significant monthly premiums.
For patients with a straight co-pay,
some of these co pays are $85
and the insurer pays nothing
and patients are paying everything.
Second, Alaska has a dominant healthcare insurer
basically a monopoly. Over 10 years ago that insurer implemented major fee schedule reductions
and that was even prior to the repeal of the 80th percentile rule.
Some services were reduced by as much as 60 percent while premiums have remained strong
and increasing. Providers today are being paid less than they were 20 years
was less than what you got paid 20 years ago. Would you be able to survive? When I reviewed
my 2025 Billings, that specific insurer paid only 36% of all claims that were submitted
to the office or to our office. Patients paid 35%
As an in-network provider, my office was required to write off 29% of all charges submitted,
nearly one-third of the care we provided because of contractual obligations.
Let me be clear, our services are not expensive and they're not excessive.
You may ask why we remain in network.
The answer is simple.
Many insurance plans in Alaska provide no coverage at all if a patient sees an out-of-Network
provider.
providers are effectively forced to stay and network just to serve their patients.
And one concrete example of what insured care looks like today, there's a common
chiropractic code, it's CPT code 98940, which is a chiropractive manipulative therapy,
which has CMT. In my particular office, that charge is $78. I just looked at an EOB that my
The insurance company allowed $45.10 of that $78 charge.
And keep in mind that's probably the only thing that patient came in for that day.
We were required to write off $32.90.
The patient paid a $35 copay and the insurance
The patient paid most of the cost plus their monthly premiums and from my perspective that is not
meaningful insurance coverage. Years ago the state recognized these issues and implemented
percentage-based safeguards for out-of-network reimbursement that system allowed providers to
assess whether staying in network was sustainable or whether they needed to go out of network to
Reimbursement is now dictated solely by internal fee schedules and payment policies.
And by payment policy, when you talk about negotiated fees and fee schedule or percentages,
what many people fail to realize is that these insurance companies develop payment
policies which are basically just their laundry list of things that they can use.
in your contract to get out of paying you for stuff.
So they reduce multiple,
they have a multiple payment policy.
So if you have multiple procedures done on the same day,
they start reducing them as they go down.
There's the reduction for if a person is not a physician.
And as the doctor said,
if his nurse practitioner does that same
service as he does. They get a reduction. Well, the service was done. The expenses remain the same and yet the payment policies are dictating what we have to write off or what
we had to put up with. So let me get back to where I was. I kind of veered off a little bit and I apologize.
the result of this is predictable providers are retiring early they're
closing their practices or leaving Alaska we are business like anything else
providers facing raising costs for labor rent supplies taxes and compliance
which compliance is a huge thing for all of our offices these days
not to mention insurances because now we have to have
Small practices must compete with hospitals and large systems for the same workforce.
We often train staff only to lose them to larger organizations that can offer better
wages and benefits.
Because of the cost of doing business as grown and reimbursements have diminished, I currently
operate with half the support staff I once had.
So what does that mean?
I'm sometimes wearing the hat at the front desk.
I am sometimes
wearing a hat of my billard.
I and sometimes
wearing
the had of a chiropractic technician.
I I running everywhere except on vacation
where I'd really like to be
or maybe even retired because I don't have
those options right now.
And on this clinic, I employ people.
My son is my partner.
And so, you know, there's a lot of reasons
why I continue to do what I do.
This will protect patient choice by making Alaska a more viable place for healthcare providers to practice and remain.
It will allow us to make informed decisions about whether being in network with strict fee limitations or operating on network, with predictable reimbursements, which is sustainable.
Using Medicare as a benchmark, you know, Medicare every year goes in and they evaluate every procedure CPT code and
they decide what the value of that is. So using that as the benchmark is a really brilliant way for us to use to evaluate things in this bill.
I just want you to know that I really appreciate the sponsors of this bill and I appreciate
you guys listening to this and
I know you're going to hear a lot about how it's going
to increase health care in Alaska and stuff, but I think you may be surprised.
I would say 99% of the providers in this state just
want to be able to do their jobs, do the things that they were educated for, take care of
their patients.
We all love our patients,
I can't do it anymore. If things remain the way that they are, I will close this clinic down.
We've been in business for 70 plus years. It's a really sad testament to the
way things are running right now. So I appreciate your time. I thank you for your service to Alaska
and its citizens. And if you have any questions, please feel free.
I'm going to ask you a question and I don't want you feel caught off guard but I am genuinely
curious about the answer to this question so please don' t feel like I' m trying to put
you in any certain way. I think about plans that I guess in recent decades had just started
to cover chiropractic care as something that insurance would reimburse. And as we look
Other types of chiropractic that maybe are kind of less mainstream and potentially having health plans reimburse those.
How in decades past, how did a practice like yours, if you've been around for some time,
how do you handle payment at that time in the past before health insurance would cover chiropractor care?
Well, it's funny that you asked that because I actually started seeing a husband and wife
team back in 1963.
I was five years old and at that time there were no reimbursements for anything, no workers
compensation,
no health insurance, and really there was very little if any health
insurance back then or workers compensation.
The only real and any service that we are licensed to do in the state that's under our
scope of practice can be reimbursed by pretty much everything with the exception of Medicare
and Medicaid.
And that is because there's some federal hip-ups in a way that things were written
there.
The only thing that Medicare will reimburse us for is if the patient isn't on an active
case.
They've fallen, they've hurt themselves, there's the possibility that they, you know, are
going to get back to where they were before the fall, et cetera.
And the only they're going pay for, is CMT, which is chiropractic manipulative treatment.
It's one to two regions, three to four regions and five regions.
Medicare doesn't even pay for extremities. Medicaid will pay
for the same thing, the CMTs, but they do not cover exams either.
So if a Medicaid patient comes to me and believe me,
I get calls every day for that for services because they're having
headaches, they are having back issues, etc.
But the only people that we can see are children ages 6 to 20.
And this is really important for you as legislators or senators to understand.
I've been trying to get this changed with the state for many years because other states
cover our services and it's not an increase to services.
a treatment for certain things that are much more cost effective so it would save the state
money. So when a person calls me and they're not 6 to 20 and if they have they are having issues
and I say to them well there's only one or two people who provide chiropractic care
but osteopathic care so I try to refer them to
them because there is no Medicaid benefit for them.
If that doesn't work, my only option
is to send them to the emergency room.
We all know how expensive emergency rooms care is.
So I can't treat those people and that needs to change.
But every other insurance company covers our services.
Whatever it is we're licensed to do,
they cover our service in the state.
And since we are conservative care,
our rates are really reasonable.
and people get back to work right away.
They feel better right way.
It's reducing opioids.
It is reducing painkillers.
It has reducing muscle relaxers.
So, you know, we have a real place in Alaska to serve people.
We just have some pick-ups that we get past.
Thank you very much, Ms. Ryan.
Appreciate your testimony today.
Are there any other questions?
Thank you very much. Senator Giesel. Would you like to wrap up, please?
Thank You, Mr. Chairman. This is Senator Kathy Giezel. Mr.. Chairman
I appreciate the people that called in to testified. I would point out to you, mr.
Chairman that health care insurance premiums we pay for health-care coverage
Insurance have not gone down
They've gone up substantially and yet
the reimbursement to clinicians who are providing those services has plummeted in this state.
Somewhere there's some money going somewhere.
I won't speculate on where, but I think we kind of know insurers are profiting.
Mr. Chairman, we have before as a rural health transformation plan, potentially.
We're facing a crisis here because of the lack of a floor or
mandatory reimbursement that allows clinicians to negotiate when they're trying to join a network of
insurance
Mr. Chairman, I know one of The Controversies related to the spill is the 450 percent of Medicare as the measure
of what a reimbursement for an out of network clinician.
As I said, Mr. Chairman, I first offered this bill in 2018.
And at that point,
I offered reimbursement of 300% of Medicare.
I base that on a Milliman study, and it was mentioned by one, I believe Mr. Davis mentioned it,
this is the 2016 study. The first study was in 2014. I'm happy to share this with the committee,
Mr Chairman. But in it they actually talk about reimbursements of the various clinical
specialists as well as primary care. My goal in 2018 was to protect primary
care, that's the door into health care if they're not being reimbursed enough to stay open.
Well, we're losing the battle because then people have to choose to go to specialists instead
but
Instead of a less expensive primary care where prevention can occur
Mr. Chairman
Taking the number in this 2016 study and applying an inflation rate
To it of anywhere from 30 to 40 percent
Would make that match number?
in this bill, instead of 450%, 350%.
I am open, Mr. Chairman, to an amendment like that.
It's important,
Mr Chairman that we keep these clinicians here.
And instead having locums come in, that's someone that lives in another state,
flies in takes care of whoever's on the client list that week, then flies home.
So, Mr. Chairman, that's the purpose of this bill, is to correct the huge flaw the crisis that we're facing right now.
Thank you, Mister Chairman.
Thank You, Senator Giesel.
I appreciate that.
We'll talk about this Bill more, and I'll kind of save my comments for that time as we'll get tired further.
Oh, senator Yunt.
Yeah, thank you.
Through the chair.
So you touched on something a minute ago that...
that I've been thinking this entire time, right?
We've got four or five years of data here showing that,
you know, the payout to clinicians is going down
and providers, but just as a guy living in Alaska,
I haven't seen health insurance costs going out.
And so I'm a data guy I like to look at numbers.
Could you please, you and your staff,
come back the next time we've this showing costs
the providers going down but if we could bring back some stuff that shows health insurance
costs in Alaska the last four or five years during the same amount of time, I think it's
going to tell a pretty obvious story. The same one we're probably all thinking but it would
be fun to see on paper because this model right here doesn't seem to be working. So thank you.
Mr. Chairman I'd be happy to provide that information. Thank you very good.
Senator Young, am afraid you've baited more comments out of me here but I'll keep them brief.
I think when we look at this issue and we
look the insured market versus the self-insured market,
we learn a lot about what's happening with health care
based on plan experience of self insured markets and those self
insured pools, they don't pay a Primera or another health
Has to be paid for by the members of their pool their costs are also increasing substantially
So to explain that where you don't you're not necessarily dealing with a huge insurance company in a self-insured pool
Alongside of similar experience in the insured pool
There has to a reason for that to happen
And so during the period of time when Senator Geese is talking about where there was a recognition that the 8th percentile rule was not great and if you ask many people they would say it was the number one reason at the time that health care and health insurance costs were exploding in the state, people were saying, well, what do we do?
Like, What can we, there's more to say, but I won't say now.
At the same time, we have really the rise and really powerful nature of pharmacy benefit managers who are also
Exploding costs and then that force is real and so the good senator has also done work in that area
and
so
We have similar cast of characters in the room today and and like all of these costs drive up premiums
And the cost of care and what people pay every day in premiums for for their care
Essentially, it's a backdoor to income tax to support very low Medicare and Medicaid reimbursement
rates for providers. That's what's happening. And what is on the horizon is pretty bad.
It's quite bad with federal cuts to Medicare, and Medicare.
And really what we're all facing here because of those, right? So, yeah, we have, you know, 270
But that's only a little bit coming back when you consider the massive cuts to to
Medicaid that we're looking at.
So none of that is good news.
Mark, thank you very much, Senator.
Think of brief it is what we set up for the next bill.
We're back on the record.
It is, 251 here in Senate Labor and Commerce.
Next, we are taking up Senate 163.
This is our first hearing on this piece of legislation.
With us today,
we have Bill Sponzer, Senator James Kauffman, and his trusty staff.
Takama Inouye for an introduction of the bill.
Senator, Mr. Inauye, welcome to Senate labor and commerce.
Please have a seat at the table here.
And again, your introduction of the bill.
Thank you much, Chair Borkman.
And members, my throats.
Chair, Bjorkmann and members of
the Senate Labor and Commerce Committee.
For the record, James Kaufman, Senate District F.
My voice work in it.
Went dormant there. I want to thank the committee chair and the Committee for saving this very exciting bill for last
It's it's perfect for a Friday afternoon
This bill is is the son of a bill that we passed in the previous legislature
So it sounds familiar. That's because the framework we're operating under today was created in previous Legislature
And that's where we created the process of every two years going through our accounts
and looking for funds where you might have put money in the past that is no longer needed
because legislation has moved on, maybe the need for the accounting line that we've created
is gone.
We build up clutter we have all these account titles that aren't really needed and some of them sound really compelling
And when you start to think about repealing them people look at them and go my goodness
Why don't we need that fund and well?
It turns out because it was handled through some other process or the need for it. Was taken away by
Changing the statutes and and so over time we accrue these unused accounts
and it builds up clutter which is not good for purposes of transparency, for efficiency,
for all the things that we like to do. There's no reason to keep this stuff on the books.
So the process that was set up every two years, ledge finance would go through the accounts,
scored by a ranking system that was created in in the prior legislation that we did and
Then we'd come up with those candidates
of funds that that seemed to no longer be needed and then we've worked with the departments with OMB with
Lech finance to try and see what we could take off of the books and the idea is every two years we keep doing this
the
The ledger just gets cleaner and cleaner, and and we don't have dormant out-of-date stuff
For example, in this latest first cut, we had an Exxon Valdez oil spill
unincorporated rural community grant fund.
It sounded really compelling, boy, you know, what is that?
But it turned out, no, it could go because other things had taken care of the need for that.
And this is always to look and see, despite the name of the fund, is it really doing any
workforce these days?
And so with that, if there's any questions, I can take questions or if the committee would
like, the chair would like to talk about anyway, to go through the sectional and kind of explain
what changed.
We're happy to do either.
Thank you, Mr. Chairman.
Thank You, Senator.
I'm coughing for bringing this bill forward.
But based on the fiscal note, it looks like there's not no money in any of the funds.
Sometimes that's true.
Increasingly it's True, because it has been swept out, but we keep the clutter on
the books.
Right, right.
Can I follow it?
Yes, please.
Thank, you.
So, I mean, like I just said, based out of fiscal notes, looks that there is no
Is there any money in any of these funds?
Not in the funds that we've identified.
When we started out on the process,
there was money and some of them.
But then, you know, through the,
I don't want to get into the complexities of sweep,
reverse sweep and all of that, money was taken out.
So at present, there aren't.
But in future, if an account does get funded
and that money's sitting there.
That's not a good thing if it's
not needed and so it would also sweep
the funds and close the account if
it wasn't needed.
One more comment.
Yes.
Right, because if there is money and
funds that need to be closed,
that's a bonus.
Right.
Yeah.
Thank you.
Thank You, Mr. Chairman.
If I may.
Yes, and that that is part of the
reason why we created this two-year
mechanism, if you recall, we've
used the same process before.
We create legislation that requires reports,
and then time goes on.
Do we still need people to work on those reports
and publish them and ship them all over the state?
Maybe not.
And so now every two years we have that process running.
And, so, we did the same thing with, you know, the accounts.
And to try and get down to doing what we really need to do.
And if there was, in the future, if it was an account
that was funded, maybe we get better times financially.
And then we can sweep that.
money out if it's not needed. So it is transparency. If the public looks at our books, they're
like, what is this money pigeon holders? A lot of people that think that we're hiding
money and leaving these unneeded account titles out there is a good way to work through the
process and improve really the transparency of government.
I just wanted to mention that also we have a Rob Carpenter with
ledge finance.
I believe available to answer questions.
I'm not sure if he's with us, but I
believe he is there.
OK, yes.
Rob is in the back.
Thank you for sticking with
us for this whole time, Mr. Carpenter.
Are there any questions?
The sectional seems straightforward to me.
I think we could probably forego having Mr N.O.A.
Read the sectiono,
but thank you very much for being here and being prepared.
Any questions or desire to read the sectional?
Hearing and seeing none, very much.
Appreciate your efforts in this.
I understand that you may have also identified
other funds that would like to add to this list.
Through the chair, yes, you create the list of funds
and then you're trying to work out legislatively,
how can you clean all that up?
Literally, it's kind of takes an act of Congress, so we create these over time, and then they're scattered all throughout the book.
So we're looking at that. We may have an opportunity to bulk this up with even more that aren't needed and take a deeper cut through it.
And we are currently working with ledge legal and ledge finance to do so.
Excellent. I think we'd be happy to entertain that very like you.
Okay. Well, we look forward to that and we.
Depending on the success and pace of work that you all are able to undertake with finance and legal we may take this bill up again under bills previously heard next week.
So we'll be in touch on that.
Okay.
Any other closing comments or questions?
All right.
Hearing nothing further, we will set Senate bill 163 aside for consideration at a future meeting.
Our next meeting will be on Monday, February 2nd.
I feel like it's been that day before.
When we will take up three items, Senate bill 170, Poltabs,
Senate Bill 211, and Senate 881, as well as maybe Bill's previously heard.
As there is no further business before the committee, we are adjourned at 3 p.m.