Alaska House bill would establish health care pricing database

Amid the ongoing effort to control Alaska’s ballooning health care costs, the Legislature is considering a bill that would establish a central repository for pricing data.

House Bill 229, sponsored by Rep. Ivy Spohnholz, D-Anchorage, would establish an all-payer claims database for Alaska, along with the Alaska Health Care Transformation Corp. to manage it. Insurers in the state would be required to work with the corporation, which would be independent from the state government, to report all claims paid for health care services with the goal of making the information more transparent.

Health care costs are higher in Alaska than anywhere else in the U.S. and have grown at a faster rate per year over the past three decades than the U.S. average, increasing about 7.9 percent per year, according to the bill.

Approximately 13.6 percent of Alaska adults reported not being able to see a doctor because of costs in 2018, according to the Alaska Department of Health and Social Services. The high costs are in part due to Alaska’s geography and limited competition, and legislators have been debating how to control those escalating costs for the past decade.

“Understanding the underlying cost drivers and market pressures of the cost of health care is important to developing policies and solutions,” Spohnholz wrote in her sponsor statement for the bill. “An Alaska Health Care Transformation Corporation tasked with establishing an (all-payer claims database) will provide a foundation for ongoing analysis, development, implementation and support for health care policy.

Payers would report medical claims, pharmacy claims, dental claims and eligibility information to the database, said Sandra Heffern, owner of consulting firm Effective Health Design and the project coordinator for the Alaska Health Care Transformation Project. The database would include information from private insurers that other data sets, such as Medicare or Medicaid payments, do not currently include. The APCD would provide apolitical data that would inform policy recommendations, she said.

One of the thorny things about incentivizing competition in the health care industry is that even determining what a service costs can be a complicated question. Providers have varying charges based on an individual person’s insurance, and the itemization of services can be unclear until the bill arrives.

In 2017, the Municipality of Anchorage passed a health care cost transparency ordinance that required providers in the municipality to disclose cost information to patients who requested it. In 2018, the state Legislature passed a similar law, slated to go into effect in January 2019. However, DHSS announced it would not impose penalties on providers or health care facilities by that date, giving them more time, with the expectation they will comply with the law.

The project committee that developed the idea for an Alaska APCD began meeting in 2017, the same year the final results for an Alaska Health Care Authority feasibility study were published. However, the two efforts were not connected, Heffern said. Provider stakeholders have been involved in the process from the beginning, as have legislators, she said.

“The project grew out of a discussion with senators, representatives, the administration and providers who all wanted to ‘do something’ about reforming the Alaska healthcare landscape,” she said. “The project brought these often disparate voices together to approach a solution from the multiple perspectives of payers, providers, policymakers and patient advocates.”

Alaska would join a growing group of states amalgamating data in the hopes of improving transparency about health care service charges and using it to develop policy recommendations designed to control the costs of health care.

Nationally, health care spending grew about 4.4 percent in 2018, reaching about $3.6 trillion, and under current law is projected to reach nearly $6 trillion by 2027, according to the Centers for Medicare and Medicaid Services. Alaska’s health care spending was worth approximately $7.5 billion in 2011, and has grown in the nearly 10 years since, according to a University of Alaska Anchorage report.

APCDs have been around for some time; Maine, one of the first states to do so, implemented one in 2012. Maryland, another state with a database in effect, has been using its data to establish a baseline for charges to understand cost drivers and costs in the state versus other regions. Sen.

Sen. Lamar Alexander, R-Tennessee, introduced a bill in 2019 that, among other changes, would require health insurers to make information like cost estimates available to enrollees through technology.

The existence of the database alone may not be enough to drive down costs, but it may help Alaska analyze to how to at least hold down costs—even a 2 percent reduction in the average annual growth rate would save about $150 million, Heffern said.

Dr. Norm Thurston, the executive director of the National Association of Health Data Organizations, told the members of the House Labor and Commerce Committee in a Feb. 21 hearing that small states were the first to do these databases, in part because of how complex the health care payer systems are in the more populous states like California and New York.

“This traditionally has been a movement coming out of small states and moving into larger states,” he said. “I’m shocked that … New York is in the process of developing one, because of the level of complexity in doing it in those states.”

Thurston said many states have chosen to use an outside vendor for the actual technology side of the database, as the solutions already exist and don’t have to be developed by the state itself, but that presents a higher up-front cost. Other states, like Arkansas, built it entirely within state government.

The corporation that would manage it would be an independent, state-formed entity with its own governance and structure, like the Alaska Railroad Corp. In the bill’s current form, the corporation would be governed by a council of 17 governor-appointed voting members and four nonvoting.

The seats for the voting members would be divided among providers, payers, policy makers, consumers, and state officials from the Division of Insurance and the Division of Retirement and Benefits. The reason the project committee was interested in a third-party corporation managing the database was in part because they wanted to create a “trusted entity” to handle the data that wouldn’t be beholden to the state, Heffern told the committee.

“In order to make these types of changes in our health care system, we have to have this kind of information, and there has to be a trusted entity so that everybody in the health care industry would trust what the trusted entity is saying,” she said.

The bill has had two hearings and is currently in the House Labor and Commerce Committee.

Elizabeth Earl can be reached at elizabethearl@gmail.com.