New idea coming on insurance “80th percentile” payment rule

State Sen. Cathy Giessel says she is working with state insurance director Lori Wing-Heier on a possible modification of the “80th-percentile” rule, a state regulation requiring insurers to pay health providers at the 80th percentile for medical procedures. Business groups and insurance companies have long blamed this for part of the steady rise in Alaska health care costs, and the belief is now backed  by research by the University of Alaska Anchorage’s Institute of Social and Economic Research. Giessel told a Commonwealth North group in Anchorage that she hopes to have the proposal ready by early October. Wing-Heier has to agree to it, of course, and the insurance director now has independent study underway of the idea, Giessel said. By requiring payments at the 80th percentile the rule has the effect of incentivizing medical practioners to raise rates, thereby raising the average on which the 80th percentile payment is made.

The state Department of Health and Social Services is asking health care providers to refund $15 million in Medicaid overpayments that resulted from an error. About 1,100 providers received notices asking for the refunds. The error resulted when a scheduled 10 percent cut in Medicaid reimbursements to medical professionals scheduled for Oct. 1 didn’t happen, resulting in payments being made.

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Premera, on 2019 premiums

Premera Blue Cross Blue Shield expects 2019 premiums in the individual health insurance market to be at least stable with 2018, its CEO told the Anchorage Daily News in an interview. CEO Jeff Roe said the state’s action to set up a federally-backed reinsurance program effectively removed very high risk, high cost Alaskans from the small individual market pool, allowing 2018 rates to drop for those remaining. The state hasn’t approved the 2019 rates yet so Roe can’t say what they might be. In a talk at the July 25 Anchorage Economic Development Corp.’s economic forecast luncheon Roe said Alaska’s health care costs are still increasing twice as fast as inflation. On overall costs, Roe said Alaska payments to doctors and hospitals are 76 percent higher than national averages, while the Consumer Price Index (which is measured in Anchorage) is 6 percent higher.  This is according to a study Premera contracted for with Milliman Inc., a consulting group.

Also, Premera will donate $1 million in a campaign to increase funding for behavioral health and homeless programs in the state. Changes in federal tax laws resulted in a $40 million refund to the company this year and over the next five years Premera will donate $8 million of that in contributions to behavioral health and homelessness programs. Covenant House, in Anchorage, will be one recipient of the current year donation.