OPINION: Alaska’s medical providers still need the 80th percentile rule

I am writing to comment on the Alaska Division of Insurance’s proposed changes to 3AAC26.110, specifically, the deletion of paragraphs (a)(1) and (a)(2), and the revision of paragraphs (4) and (5)(A). Alaska Hand Rehabilitation opposes the proposed changes. As president-elect of the Alaska Medical Group Management Association and an Alaskan consumer of health care, I also oppose the proposed changes.

Our concern is that the proposed changes further unbalance the patient/provider/carrier relationship in the carrier’s favor. Simply put, the proposed regulation changes grant more power to the carriers to force medical providers into their networks. Many of our members are small or single-practice providers. Many patients prefer this simple, personalized treatment setting. Large providers, such as corporate chains/hospitals, have negotiating power in contract negotiations with carriers. For our smaller members, it’s “take it or leave it” -- join our network for a drastically reduced reimbursement, treat the patient for free, or be forced to not accept patients for most payer populations.

This scenario is especially true for Premera Blue Cross, the largest payor in Alaska, which has spearheaded this effort to remove the regulation. Just a few weeks ago, I received a letter from my chiropractor that she would be leaving the Premera network due to a drastic reduction in her contract rates. She simply could not afford to be in-network any longer. Without the protection of this regulation, I fear she will be forced out of business entirely which will for certain happen to other small offices. Just this week, Alaska Regional Hospital has closed their senior clinic. Thousands of seniors will go without care without this facility. This facility’s primary payor was Medicare. Without the 80th percentile rule, carriers will follow Medicare’s rates. Small business health care providers will drown. As in-network providers with Premera, over the past 5 years, clinics have seen reimbursement rates continue to decrease while overhead has only increased. As a consumer of health care in Alaska and as an administrator, I am worried for the future of health care in Alaska.

We are aware that the 80th percentile rule is seen as a cost driver by some. The supporting materials state that the federal No Surprises Act protects consumers from some kinds of medical bills from out-of-network providers. As patients ourselves, we applaud that, but it doesn’t apply to our members and patients in this market. Please be reminded that the protections under the No Surprises Act for balancing billing only protect those being treated in an acute hospital setting. Providers can still balance-bill those being seen in an outpatient setting. The 80th percentile rule held payers accountable for a reasonable and customary allowed amount (not 80% of our charge amount, as some would say) that allowed our practices to keep our businesses open and provide care to a broader range of patients. Without this rule, patients will endure higher costs, as carriers will pay providers far less than reasonable and patients will be left with the bill for the difference.

Let’s look at what is happening across the nation as a response to the No Surprises Act. We have not seen premiums decrease nor are we seeing patients’ liability, deductibles and coinsurances, decrease. These are states without any consumer protections similar to Alaska’s 80th percentile rule, so how is removing it going to reduce cost? We are seeing a push from payers nationwide to drop provider contracts as well as close panels so that providers cannot contract. We see this trend especially for facility-based providers. They are then denied any recourse; the IDR is non-functioning and has only raised its fees to providers.

We understand that the Division of Insurance regulates insurance and not providers, but without the 80th percentile rule, there will be no laws in place to ensure health care providers are equitably reimbursed for the services provided, especially our smaller or single-practice members. Absent this rule, there will be fewer medical providers to choose from and more of those who are left will be forced in to cash practice. More patients are going to find it difficult to find care. The division’s website lists its mission as: “to regulate the insurance industry to protect Alaskan consumers.” How are Alaskan consumers protected under the scenario described above?

Please do not support the changes to 3AAC26.110 until additional language with assurances for small providers that better reflect conditions in this market can be provided.

Kati Harkreader, BA, CMPE, is a Practice Administrator at Alaska Hand Rehabilitation, Inc. and executive board president-elect of the Alaska Medical Group Management Association.

The views expressed here are the writer’s and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)adn.com. Send submissions shorter than 200 words to letters@adn.com or click here to submit via any web browser. Read our full guidelines for letters and commentaries here.