Mat-Su lawmakers leading efforts in health care reform

Mat-Su legislators are leading what could become major reforms in health care for Alaskans.

One bill, by Republican Sen. David Wilson, would repeal the state Certificate of Need, or “CON” licensing program for health care facilities, which Wilson argues is an unnecessary regulatory burden on competition in health care.

Another proposal, by Sen. Shelley Hughes, R-MatSu, would bring transparency to health care pricing information and establish incentives for consumers to shop around for better deals on medical care. Hughes’ Senate Bill 41 would also share part of any savings in costs with consumers, an innovative approach not being done elsewhere.

Wilson’s Senate Bill 26, repealing the CON, was voted out of the Senate Health and Social Services Committee last week, and is now in the Senate Labor and Commerce Committee.

“Certificate of Need programs were originally intended to restrain health care costs and improve access to care for poor and underserved populations,” Wilson said, introducing the bill in committee.

“The laws regulate and limit the entry of medical supplies and facilities, which has resulted in fewer incentives for providers to improve quality and outcomes,” he said.

“Four decades of data and studies show the CON laws have not controlled costs, improved quality or increased access to care for the underserved.”

Instead, the laws have established health care monopolies dominated by larger institutions resulting in barriers to new or expanded medical facilities, Wilson said. A competitive, well-functioning health care market creates incentives for innovation from new entrants, lowering the cost of health care, Wilson said.

There are critics, however. Jared Kosin, director of the Alaska State Hospital and Nursing Home Association, or ASHNA, said certain institutions, like community hospitals, are legally required to offer costly public services like 24-hour emergency rooms, and need to able to offer an array of other medical services that are profitable enough to offset these costs.

By limiting the number of medical facilities in a community the CON license ensures the ones that are there can financially sustained. This is particularly important in Alaska, where many communities are small and remote, and where emergency services are critically important.

“Because of the community responsibility to provide 24-hour medical service and other essential services, hospitals have significant fixed costs and operating costs that must be covered. Not all services in a hospital are profitable. In fact, many operate at a loss and the hospital relies on profitable services to maintain operations,” Kosin said in a letter to the Senate Health and Social Services Committee.

Sen. Shelley Hughes’ SB 41, on health care cost transparency, contains incentives for consumers to shop around for better prices. Hughes had a similar bill last year.

SB 41 would have insurers as well as medical practitioners disclose prices for procedures. The bill requires insurers to publish what they pay providers, which is typically at a lower negotiated level than providers’ “rack” prices.

Had Hughes’ bill been adopted last year insurers would have had to publish only Alaska rates. Soon there will be a national requirement based on a law passed by Congress in 2020, although the federal program may miss a January deadline as insurers work out problems, state insurance officials told the committee.

One aspect of Hughes’ bill is that if a consumer can find a less expensive provider for a procedure the savings, compared with an average rate within a geographic area, the savings are split between the consumer and the insurer, and an employer if it is a company-sponsored plan. SB 41 would have a minimum of one-third of the savings go to the consumer. Several states are experimenting with this approach.

One uncertainty for SB 41 as well as the federal program is providing some allowance for when a price quoted and then changes in a procedure have be made which would affect the price and, and the calculated savings.

Health insurance companies, however, are concerned that the incentives in SB 41 that drive consumers to the lowest price provider but might not assure better long-term outcomes. “The cost of a procedure may be lower, but this may lead to increases in costs stemming from additional corrective procedures. Also, an insurer may want to pay more to a particular specialist to assure a better outcome,” Gary Strannigan, vice president for government affairs at Premera Blue Cross/Blue Shield, said in a letter to the Senate committee.