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State delays enforcement of new health care price transparency law

  • Author: James Brooks
  • Updated: December 28, 2018
  • Published December 27, 2018

JUNEAU — The Alaska Department of Health and Social Services is delaying enforcement of a new law requiring hospitals and clinics to post the pre-insurance cost of their most common medical procedures.

In a public notice filed last week, the department wrote, “DHSS will not impose a penalty on any health care provider or health care facility for failure to comply (with the law) requiring price collection, posting, and reporting to DHSS, beginning January 1, 2019 and continuing until implementing regulations are in effect.”

The law was scheduled to take effect Jan. 31, with penalties beginning in March, but state officials say they can’t meet that deadline.

“It takes a while to get the regulations out, and we didn’t think it would be fair to the regulated community to have a law in place without regulations for them to follow,” said Clint Farr, the official in charge of the regulations project for DHSS.

The delay may mean a longer wait for Alaskans seeking information about the cost of medical procedures in the state.

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The law extends statewide an Anchorage ordinance approved by the city Assembly in 2017. That ordinance requires medical providers to give patients a cost estimate within 10 days. Providers are also required to include billing codes, so the patient can talk to their medical insurance company to determine what procedures will be covered.

The state law goes beyond the Anchorage ordinance: In addition to the cost-estimate procedures, the law requires medical facilities to publicly post the “undiscounted price” of 60 commonly administered medical services performed at that location in the previous year. Those facilities are also required to share that information with the state, which intends to use the data for cost comparisons that will be published online.

If a clinic or hospital doesn’t post those prices, it can be fined up to $10,000.

Hospitals said they are prepared for the changes brought by state law, in part because of a federal rule that comes into effect Jan. 1. That’s the deadline set by the Centers for Medicare and Medicaid Services for hospitals to post the costs of procedures online.

“For hospitals, it’s really not that big of a change. They’re having to create this list of prices and post them; that piece is new and will require a little bit of work, but they’re all moving forward with doing it,” said Jeannie Monk of the Alaska State Hospital and Nursing Association.

The prices that will be posted are the prices before insurance, and that comes with a drawback, Monk said.

“The problem with those prices is that nobody pays them. So it’s a step forward toward transparency, but it’s not really useful information,” she said.

Monk said at least one hospital — Fairbanks Memorial Hospital in Fairbanks — is already posting its prices online, and has been for several years.

Mikal Canfield, a spokesman for Providence Health & Services Alaska, said by email that “Providence supports price transparency and many aspects of the state law, including providing price estimates on request, have been part of Providence’s practice for years. Additionally, Providence has been compliant with the Municipality of Anchorage ordinance regarding health care price transparency since it was implemented in April 2017.”

Envisioned by Rep. Ivy Spohnholz, D-Anchorage, and the prime author of the legislation, the health care pricing transparency bill passed the House 34-6 in 2017 and advanced through the Senate in 2018. When it came time to schedule the measure for a final vote, however, the chairman of the Senate Rules Committee, Sen. Kevin Meyer, R-Anchorage, declined to put it on the calendar.

Meyer, now lieutenant governor, did not have time in his schedule for an interview Wednesday or Thursday, his chief of staff said.

Meyer’s action would have killed the measure if it weren’t for a procedural maneuver that inserted its language into a different bill. That measure, Senate Bill 105, passed the House 29-11 and the Senate 19-1, carrying Spohnholz’s idea into law.

Gov. Bill Walker signed that bill into law in August, but Farr said many questions were left unanswered by the legislation. For one, how broadly should the new law apply? Technically, he said, it could apply to massage therapists and acupuncturists who do prescription work.

“How big a net do we cast?" Farr asked.

In addition, it isn’t clear how medical practitioners should report their data to the state, or even how they should display their prices under the law. Using a 20-point typeface, as the law requires, could generate enough material to fill dozens of standard-sized sheets of paper.

Can those prices be displayed electronically — for example, on a wall-mounted screen?

Resolving questions like those takes months, Farr said, adding that the state hasn’t had enough time to find answers. For example, the state’s standard procedure for drafting regulations requires a proposal to go out for public comment, and the public should have two months to submit those comments. That hasn’t happened yet.

“When you get through all the public noticing and drafting and law review and stuff that has to happen, that’s a minimum six months,” Farr said.

He said the state could realistically have the regulations done by May or June.

The billing transparency measure represents one of the first significant health regulations undertaken by the new administration of Gov. Mike Dunleavy — who pledged on the campaign trail to reduce regulations. New DHSS Commissioner Adam Crum made similar remarks during his unsuccessful 2016 campaign for state Senate.

Farr said the delay is not due to any actions taken by the new administration. This regulatory project began under Walker, and Farr hasn’t received input from higher-ups in the new administration.

“Nothing out of the ordinary,” Farr said.

Correction: An earlier version of this article incorrectly reported that the law requires the prices of the top 10 most commonly performed procedures to be posted in a clinic or hospital. It is the top 10 in six distinct categories, or 60 total.