DOI Seeking Public Comment on 80th Percentile Regulation in Alaska

  • February 9, 2023

    On January 25, 2023, the Alaska Division of Insurance (DOI) proposed a regulation change that would abolish Alaska’s 80th percentile regulation. The 80th percentile regulation, which was enacted in 2004, requires health insurers to pay out-of-network providers for services at an amount equal to or greater than the 80th percentile of charges in a geographical area.

    The 80th percentile regulation was originally meant to protect patients from balance billing. Instead, it has contributed to Alaska’s soaring healthcare spending. The regulation allows providers to increase charges over time with little incentive to keep costs low or to join insurance networks.

    With the implementation of the Federal No Surprises Act in 2022, which protects consumers from balance billing, the 80th percentile regulation is no longer needed.

    Why does the regulation matter?

    Alaska has the highest healthcare costs in the country, and the 80th percentile regulation unnecessarily makes the state’s healthcare more expensive.

    According to a 2018 University of Alaska Anchorage report, the average annual increase in healthcare spending in Alaska between 2005 and 2014 was $376 million. The report says the 80th percentile regulation accounts for “between 8.61% and 24.65% of the increases in expenditures the state has experienced over the last decade. These results are statistically significant and robust.” This increase is typically borne by employers and consumers directly.

    Call to action

    In the coming weeks, the DOI will host three public hearings to consider comments on the proposed abolishment of the regulation. The first hearing will take place in Anchorage on February 22 from 3:00 pm to 7:00 pm. There will be an additional hearing in Anchorage on February 24 from 1:00 pm to 5:30 pm.

    The division will hold a third hearing in Juneau on March 1 from 1:00 pm to 5:00 pm. Commenters may provide comments either in person or virtually. You can find additional details on these meetings here.

    We’re asking you to join Premera leaders Nadja Hipszer and Jim Grazko in Anchorage or Gary Strannigan in Juneau to add your voice to the call for abolishment.

    If you’re unable to attend in person, or in addition to attending, we suggest you submit your comments in writing. We’ve provided an email template to get you started; please add the specific ways the 80th percentile regulation has impacted you.

    The DOI is accepting written comments until March 6, 2023, at 5:00 pm. Information on the meetings and how to submit comments is available here.

    This is a unique moment in time with a short window during which there is an opportunity to remove this inflationary, now-unnecessary rule. If we miss this opportunity, we will likely not have another chance, and the status quo with continued cost increases will continue. Now is our chance to act to affect change and reduce healthcare costs in Alaska! We may never have this chance again.

    Email template:

    DOI Director Lori Wing-Heier,

    I am writing to express my support for the abolishment of the 80th percentile regulation. This regulation unnecessarily makes healthcare more expensive and significantly contributes to the healthcare cost growth experienced across the state. These increased costs are typically borne by employers and consumers directly.

    [Add how this regulation has impacted you and your business]

    While the 80th percentile regulation was originally meant to protect patients from balance billing, it has instead contributed to Alaska’s soaring healthcare spending. With the implementation of the Federal No Surprises Act in 2022, which protects consumers from balance billing, the 80th percentile regulation is no longer needed.

    Sincerely,

    [Add your signature here]

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